Realtors are facing an increasing number of buyers who are backing out of home purchases as the real estate market becomes more challenging.
A report from Redfin revealed that nearly 56,000 home-purchase agreements fell through in June, accounting for 15% of all homes under contract that month. This marks the highest cancellation rate for any June in the company’s records.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the trend to buyers being more selective, particularly in a market where costs are rising. “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,” she stated.
In Miami, another Redfin agent, Rafael Corrales, reported experiencing “nightmare scenarios,” including last-minute cancellations over trivial details. In June, around 2,500 home purchases were canceled in Miami, representing about 17.6% of homes that went under contract that month. Corrales emphasized that the primary concern for buyers is affordability.
The median sale price for homes reached a record $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. In addition to high home prices and ongoing elevated mortgage rates, prospective buyers are also burdened by rising costs related to insurance, property taxes, homeowners association fees, and other expenses tied to homeownership, all worsened by inflation.
This lack of affordability has contributed to a significant drop in home sales across the nation, with data from Redfin showing the largest decline in eight months. Home sales fell by 0.5% in June compared to the previous month, marking the biggest decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.