Realtors are currently facing a surge in buyers backing out of home purchases, reflecting a cautious approach to a challenging real estate market.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all contracts for that month, according to a report from Redfin. This is the highest percentage ever recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, indicated that buyers are becoming increasingly selective as they navigate a higher-cost market. Zubiate noted that many are withdrawing from deals over minor issues, largely because the financial burden of purchasing a home has become too significant to overlook without meeting their essential criteria.
Rafael Corrales, a Redfin agent in Miami, observed troubling trends, including last-minute cancellations for trivial reasons. In Miami, approximately 2,500 home purchases were aborted in June, which accounts for about 17.6% of that month’s contracts. Corrales pointed out that the paramount issue remains affordability.
In June, the median home sale price hit an all-time high of $442,525, while the average rate for a 30-year mortgage was recorded at 6.92%. In addition to elevated home prices and still high mortgage rates, potential buyers are also faced with rising insurance costs, property taxes, homeowners association fees, and other expenses associated with owning a home, all of which have been intensified by inflation.
The decline in housing affordability has contributed to the most significant drop in home sales nationwide in the past eight months, according to Redfin. Month over month, home sales decreased by 0.5% in June, marking the largest decline since October 2022. Year-over-year, sales dropped by 1.1% and were 21.5% lower than levels prior to the pandemic.