Realtors are experiencing a surge in buyers backing out of home purchases as individuals become more discerning in a challenging real estate market.
In June, nearly 56,000 home purchase agreements were abandoned, accounting for 15% of all contracts that month, according to a recent report from Redfin. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes the increase in cancellations to a more selective group of buyers who are facing higher market costs. 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 witnessing numerous last-minute cancellations over trivial matters, with around 2,500 home purchases canceled in June, roughly 17.6% of homes that went under contract. He emphasized that the main concern remains affordability.
The median home sale price hit a record high of $442,525 in June, with the average 30-year mortgage rate at 6.92%. Alongside elevated home prices and ongoing high mortgage rates, potential buyers are also confronted with added costs from insurance, property taxes, HOA fees, and other expenses linked to homeownership, all exacerbated by inflation.
This lack of affordability has led to a significant drop in home sales across the country, with a 0.5% decrease in June—the largest decline in eight months, according to Redfin. Year-over-year, home sales fell by 1.1% and stood at 21.5% below pre-pandemic levels.