Realtors are witnessing an unprecedented number of buyers withdrawing from home purchases, as potential buyers become increasingly selective due to the challenges in the current real estate market.
A recent Redfin report revealed that nearly 56,000 home-purchase contracts fell through in June, which amounts to 15% of all homes that were under contract that month. This marks the highest percentage recorded for June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to a more discerning buyer population that is facing significant market 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,” she stated.
In Miami, Redfin agent Rafael Corrales reported experiencing “nightmare scenarios” involving last-minute contract cancellations over trivial matters. Last month, about 2,500 home purchases were canceled in Miami, representing roughly 17.6% of homes that went under contract in June. Corrales noted that the primary concern for buyers remains affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate for a 30-year mortgage stood at 6.92%. Coupled with soaring home prices and elevated mortgage rates, prospective home buyers are also facing additional burdens, including insurance, property taxes, homeowners association fees, and other costs linked to homeownership, all of which have been worsened by inflation.
This lack of affordability has led to a significant drop in home sales nationwide, with Redfin reporting a 0.5% decline in June—marking the largest decrease since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% below pre-pandemic levels.