Realtors are experiencing an increase in buyers backing out of deals, as potential homeowners become more selective in a challenging real estate market.
According to a Redfin report released on Tuesday, nearly 56,000 home purchase agreements were abandoned in June, representing 15% of all homes that were under contract that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the surge in cancellations to buyers being more discerning while facing a pricey market. “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, another Redfin agent operating in Miami, reported witnessing “nightmare scenarios,” including last-minute cancellations driven by insignificant details. In Miami, approximately 2,500 home purchases were scrapped last month, amounting to about 17.6% of homes that were under contract in June. Corrales indicated that affordability remains the primary concern.
In June, the median home sale price hit a record high of $442,525, while the average rate for a 30-year mortgage stood at 6.92%. Along with elevated home prices and persistent high mortgage rates, aspiring buyers are also facing additional financial burdens, including insurance, property taxes, homeowner association fees, and other costs associated with homeownership that have been intensified by inflation.
The nationwide affordability crisis has led to a significant drop in home sales, the largest decline in eight months, according to Redfin. Monthly home sales decreased by 0.5% in June, marking the most substantial decline since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% below levels seen before the pandemic.