Realtors are experiencing an unprecedented number of buyers backing out of home deals, with many becoming more discerning in a challenging real estate market.
A Redfin report released on Tuesday revealed that nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest percentage recorded for any June, according to the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes this increase in cancellations to buyers being more selective due to rising costs. “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 explained.
Rafael Corrales, a Redfin agent in Miami, reported witnessing “nightmare scenarios,” including last-minute cancellations over trivial details. Last month, about 2,500 home purchases were canceled in Miami, representing approximately 17.6% of homes that went under contract. Corrales emphasized that the primary concern is still affordability.
In June, the median home sale price hit a record $442,525, with the average interest rate on a 30-year mortgage at 6.92%. In addition to high home prices and elevated mortgage rates, potential homebuyers are also facing the burden of insurance, property taxes, HOA fees, and other costs linked to homeownership, all made worse by inflation.
This ongoing lack of affordability has led to the largest decline in home sales seen in eight months. According to Redfin, home sales dropped by 0.5% in June compared to the previous month, the biggest decrease since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.