Realtors are facing an unprecedented number of buyers backing out of home purchases as individuals become more discerning in a challenging real estate environment.
In June, nearly 56,000 home-purchase agreements were canceled, amounting to 15% of all homes that went under contract that month. This figure represents the highest cancellation rate for any June recorded by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this surge in cancellations to buyers who are being extremely selective, largely due to the high costs associated with home buying. “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, described “nightmare scenarios” where last-minute cancellations occur over trivial aspects. In June, around 2,500 home purchases were revoked in Miami, which is about 17.6% of homes that were under contract. He noted that the core issue remains affordability.
The median home sale price reached an all-time high of $442,525 in June, with 30-year mortgage rates averaging 6.92%. Potential buyers are also facing escalating costs from insurance, property taxes, and homeowners association fees, compounded by inflation.
This widespread lack of affordability has led to the most significant decline in home sales in eight months. According to Redfin, home sales fell by 0.5% in June, marking the largest monthly drop since October 2023. On a year-over-year basis, home sales decreased by 1.1%, representing a 21.5% decline from pre-pandemic levels.