Realtors are facing an unprecedented increase in buyers backing out of home purchases as individuals become more selective in a challenging real estate environment.
According to a recent report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that were under contract that month. This marks the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the uptick in cancellations to buyers who are more discerning amid rising market costs. 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 “nightmare scenarios,” including last-minute dropouts over trivial concerns. Last month, approximately 2,500 home purchases were canceled in Miami, accounting for about 17.6% of homes under contract in June. Corrales highlighted that the primary concern is affordability.
In June, the median home sale price hit an all-time high of $442,525, with the average rate on a 30-year mortgage reaching 6.92%. Alongside the expensive housing market and elevated mortgage rates, potential buyers are also confronting additional costs like insurance, property taxes, HOA fees, and other homeownership expenses that have been intensified by inflation.
This widespread affordability issue has led to a significant decline in home sales, the largest drop observed in eight months, according to Redfin. Monthly sales saw a decrease of 0.5% in June, marking the most considerable decline since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.