Realtors are facing an unprecedented number of buyers backing out of home purchases as consumers become increasingly selective in a challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were terminated in June, amounting to 15% of all contracts that month. This marks the highest percentage for June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the increase in cancellations to buyers who are now more discerning, largely due to high market costs. “They are withdrawing due to minor issues because the monthly expenses related to buying a home are simply too significant to overlook,” Zubiate stated.
In Miami, Redfin agent Rafael Corrales described some “nightmare scenarios,” including last-minute cancellations based on trivial concerns. Approximately 2,500 home purchases were called off in Miami last month, which represents about 17.6% of homes that entered contract in June. However, Corrales noted that the primary challenge remains affordability.
The median home sale price hit an all-time high of $442,525 in June, with the average rate for a 30-year mortgage at 6.92%. Coupled with the elevated home prices and persistent mortgage rates, prospective buyers also face rising costs from insurance, property taxes, homeowners association fees, and other expenses associated with homeownership, all intensified by inflation.
This widespread lack of affordability has led to the largest drop in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the steepest decline since October 2023. Year-over-year, sales fell by 1.1% and were 21.5% lower than pre-pandemic figures.