Realtors are experiencing an unprecedented number of buyers withdrawing from home purchases as consumers become increasingly selective in a challenging real estate market.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage of cancellations recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the increase in cancellations to buyers who are hesitant due to the rising costs associated with purchasing a home. “They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list,” Zubiate noted.
In Miami, another Redfin agent, Rafael Corrales, reported experiencing challenging situations where buyers back out at the last moment over small details. In June alone, approximately 2,500 home purchases were canceled in Miami, accounting for around 17.6% of homes that went under contract. Corrales identified affordability as the key issue facing potential buyers.
The median home sale price reached a record high of $442,525 in June, with average mortgage rates for 30 years sitting at 6.92%. In addition to already steep house prices and high mortgage rates, buyers are also facing increased costs from insurance, property taxes, homeowners association (HOA) fees, and other expenses tied to homeownership, all further strained by inflation.
This lack of affordability is contributing to a significant decline in home sales nationwide, marking the largest decrease in eight months, according to Redfin. There was a 0.5% decline in month-over-month home sales in June, which is the most considerable drop since October 2023. Year over year, home sales dropped by 1.1% and were 21.5% lower than levels seen before the pandemic.