Realtors are experiencing an increasing number of buyers backing out of home purchases as the real estate market remains tough and buyers become more selective.
In June, nearly 56,000 home-purchase agreements, representing 15% of all contracts for that month, were terminated, according to a report by Redfin released on Tuesday. This marks the highest cancellation rate for any June recorded by the real estate service.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers being more discerning amid rising costs. “They’re backing out due to minor issues because the monthly expenses of buying a home today are simply too high to justify not getting everything on their must-have list,” Zubiate stated.
Rafael Corrales, another Redfin agent in Miami, reported experiencing “nightmare scenarios” resulting in last-minute cancellations over trivial factors. In Miami alone, approximately 2,500 home purchases were canceled last month, accounting for 17.6% of homes under contract in June. Corrales emphasized that the primary concern is affordability.
The median home sale price reached a record $442,525 in June, while the average 30-year mortgage rate climbed to 6.92%. Buyers are also facing additional financial burdens from insurance, property taxes, HOA fees, and other costs related to homeownership, all of which have been worsened by inflation.
As a result of these affordability challenges, home sales have witnessed their largest decline in eight months, according to Redfin. Monthly home sales fell by 0.5% in June, marking the biggest drop since October 2023. Year-over-year sales dropped by 1.1% and are 21.5% lower than pre-pandemic numbers.