Realtors are facing an increasing number of buyers backing out of home purchases as individuals grow more selective amidst a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were aborted, representing 15% of all homes that went under contract, according to a report from Redfin released on Tuesday. This marks the highest cancellation rate for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed this trend to buyers being more choosy in a market where prices have surged.
“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, highlighted the extent of the issue, stating that he has witnessed “nightmare scenarios” unfold, including last-minute cancellations triggered by small concerns. In Miami alone, about 2,500 home purchases were canceled last month, which equates to roughly 17.6% of homes that went under contract in June. However, Corrales noted that the overarching challenge for many buyers is affordability.
In June, the median home sale price reached an all-time high of $442,525, with the average rate on a 30-year mortgage hitting 6.92%. Coupled with high housing costs, steep mortgage rates, and additional expenses such as insurance, property taxes, and HOA fees—all worsened by inflation—prospective buyers are finding it increasingly difficult to enter the market.
The national affordability crisis has led to a significant decline in home sales, with Redfin reporting the most substantial drop in eight months. Monthly home sales saw a decrease of 0.5% in June, marking the largest decline since October 2023. Year-over-year, home sales fell by 1.1%, and were 21.5% below pre-pandemic levels.