Realtors are facing an increasing number of buyers backing out of housing deals as individuals become more selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were canceled, amounting to 15% of all homes that were under contract that month. This represents the highest cancellation rate recorded for June, according to a report from Redfin released on Tuesday.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this surge in cancellations to buyers who are becoming more exacting due to the rising costs associated with home buying. She noted that many are withdrawing from deals over minor issues since the expenses of purchasing a home are too substantial to overlook, leading them to expect every item on their wish list to be met.
Rafael Corrales, a Redfin agent in Miami, described instances of “nightmare scenarios” where buyers have canceled last-minute over trivial concerns. He indicated that approximately 2,500 home purchases were scrapped in Miami last month, representing about 17.6% of homes that went under contract in June. Corrales pointed out that the primary issue at hand is affordability.
As of June, the median home sale price reached a record high of $442,525, with the average rate for a 30-year mortgage hitting 6.92%. In addition to elevated home prices and high mortgage rates, prospective buyers are also facing burdens from insurance, property taxes, homeowners association fees, and other expenses tied to homeownership, which have all been amplified by inflation.
The nationwide lack of affordability is contributing to the most significant downturn in home sales in eight months. According to Redfin, home sales decreased by 0.5% in June compared to the previous month, marking the steepest decline since October 2023. On a year-over-year basis, home sales fell by 1.1% and were 21.5% below levels seen before the pandemic.