Homebuyers Hit the Brakes: Cancellations Surge Amid Soaring Costs

Realtors are encountering an unprecedented number of buyers who are backing out of home purchases, largely due to increased selectiveness amid a challenging real estate environment.

A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were canceled in June, which constitutes 15% of all homes that were under contract. This percentage represents the highest recorded for any June in the platform’s history.

Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes the frequent cancellations to buyers being more discerning as they face soaring costs in today’s market. She noted, “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.”

In Miami, Redfin agent Rafael Corrales reported witnessing distressing scenarios, including last-minute cancellations over trivial matters. In June alone, approximately 2,500 home purchases were canceled in the area, making up about 17.6% of homes that had gone under contract. Corrales identified affordability as the primary concern for prospective buyers.

The median home sale price reached an all-time high of $442,525 in June, accompanied by an average 30-year mortgage rate of 6.92%. Alongside elevated home prices and high mortgage rates, potential homebuyers are also grappling with increased insurance, property taxes, HOA fees, and other ownership costs that have risen due to inflation.

This nationwide lack of affordability has contributed to the steepest decline in home sales over the past eight months, according to Redfin. Month-over-month, home sales dropped by 0.5% in June, marking the largest decrease since October 2023. Year-over-year, sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.

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