Realtors are experiencing an increase in buyers backing out of home purchases as consumers become more selective in a challenging real estate market.
According to a report by Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract during that month. This marks the highest percentage of cancellations for any June recorded by the platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers being more particular, influenced by the elevated costs associated with purchasing a home. 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 having encountered significant last-minute cancellations due to small details. Approximately 2,500 home purchases were canceled in Miami last month, representing about 17.6% of homes that went under contract in June. Corrales highlighted that affordability remains the key challenge.
The median home sale price in June reached a record high of $442,525, while the average rate on a 30-year mortgage stood at 6.92%. Prospective buyers are also facing additional challenges, such as rising insurance costs, property taxes, HOA fees, and other homeownership expenses, all of which have been worsened by inflation.
This drop in affordability nationwide has contributed to a significant decline in home sales, which have experienced their largest decrease in eight months, according to Redfin. Sales fell by 0.5% in June compared to the previous month, marking the most substantial decline since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.