Realtors are facing an unprecedented number of buyers backing out of home purchases, as consumers are becoming more selective in a challenging real estate market.
According to a Redfin report released Tuesday, nearly 56,000 home purchase agreements were canceled in June, amounting to 15% of all homes that went under contract during that month. This marks the highest percentage recorded for any June by the real estate website.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are more discerning in light of rising costs associated with home purchases. “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 stated.
In Miami, Redfin agent Rafael Corrales noted troubling patterns, including last-minute deal cancellations over small issues. He reported that about 2,500 home purchases were canceled in Miami last month, translating to around 17.6% of homes that went under contract. Corrales highlighted affordability as the main challenge.
June also saw the median home sale price hit a record $442,525, with average rates for 30-year mortgages at 6.92%. Buyers are further burdened by rising insurance costs, property taxes, homeowners’ association fees, and other expenses associated with homeownership, all worsened by inflation.
Nationwide, the declining affordability in the market has led to a significant drop in home sales, marking the largest decline in eight months. Redfin reported a 0.5% decrease in sales for June compared to the previous month, the biggest drop since October 2023. In year-over-year comparisons, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.