Realtors are encountering a significant number of buyers backing out of home purchases as shoppers become increasingly selective in a challenging real estate market.
According to a report released by Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that entered into a contract that month, marking the highest percentage recorded for any June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this trend to buyers being more discerning and facing the reality of high costs associated with home buying. “They’re backing out due to minor issues because the monthly costs linked to buying a home today are just too high to justify not getting everything on their must-have list,” Zubiate explained.
In Miami, Redfin agent Rafael Corrales reported witnessing “nightmare scenarios,” including last-minute cancellations triggered by trivial details. Last month, around 2,500 home purchases were canceled in Miami, equating to about 17.6% of homes under contract in June. Corrales noted that the root concern for many is affordability.
The median home sale price in June hit a record high of $442,525, with the average rate for a 30-year mortgage at 6.92%. Alongside high home prices and elevated mortgage rates, potential home buyers are also facing increased expenses from insurance, property taxes, HOA fees, and other costs linked to homeownership, which have been intensified by inflation.
The heightened unaffordability in the real estate market has led to the most significant drop in home sales seen in eight months, as reported by Redfin. Monthly sales fell by 0.5% in June, representing the largest decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic figures.