Realtors are witnessing an increase in buyers backing out of home purchases as the challenging real estate market makes many potential homeowners more selective.
A recent report from Redfin reveals that nearly 56,000 home-purchase agreements were terminated in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded in any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers becoming more demanding in response to rising costs in the housing 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.”
Rafael Corrales, a Redfin agent in Miami, reported observing “nightmare scenarios,” including last-minute deal cancellations over trivial details. In June alone, approximately 2,500 home purchases were canceled in Miami, which equates to about 17.6% of homes that went under contract during that time. Corrales emphasized that the core issue is affordability.
The median home sale price reached a historic high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. In addition to elevated home prices and mortgage rates, prospective buyers are also contending with rising insurance, property taxes, HOA fees, and other homeownership costs exacerbated by inflation.
This lack of affordability has led to a significant drop in home sales across the country, with Redfin reporting the largest monthly decline in eight months. Home sales fell by 0.5% in June, the steepest decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% below pre-pandemic figures.