Real estate agents are facing an increasing number of buyers backing out of home purchases as the market becomes more challenging. According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract during that month. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this surge in cancellations to increasingly selective buyers who are navigating a costly market. She noted, “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.”
In Miami, Redfin agent Rafael Corrales reported “nightmare scenarios” involving last-minute cancellations over trivial matters. Approximately 2,500 home purchases were canceled in Miami in June, which represents about 17.6% of homes that went under contract that month. Corrales emphasized that affordability remains the primary concern for buyers.
The median home sale price reached a record high of $442,525 in June, while the average interest rate on a 30-year mortgage rose to 6.92%. In addition to steep home prices and elevated mortgage rates, potential homebuyers are facing additional burdens from rising insurance costs, property taxes, HOA fees, and other expenses related to homeownership, all amplified by inflation.
The nationwide decline in affordability has led to a significant drop in home sales, which saw their largest decrease in eight months according to Redfin. There was a 0.5% decline in home sales from May to June, the largest drop since October 2023. Year-over-year, home sales fell by 1.1% and remained 21.5% below pre-pandemic levels.