Realtors are facing an increasing number of buyers backing out of home purchases as individuals become more discerning in a challenging real estate environment.
According to a recent report by Redfin, nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This figure represents the highest percentage recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes the rise in cancellations to buyers being more selective amid rising costs. “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.
Rafael Corrales, another Redfin agent based in Miami, reported experiencing “nightmare scenarios” involving last-minute cancellations over trivial details. Approximately 2,500 home purchases were canceled in Miami during June, which represents about 17.6% of homes under contract that month. Corrales highlighted that affordability remains the primary concern.
The median home sale price reached a record high of $442,525 in June, accompanied by an average mortgage rate of 6.92% for a 30-year loan. In addition to the elevated home prices and ongoing high mortgage rates, potential buyers are also encountering increased expenses related to insurance, property taxes, HOA fees, and other costs tied to homeownership, which have all been impacted by inflation.
This widespread lack of affordability has led to the most significant decline in home sales in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, marking the largest decline since October 2023, while year-over-year sales fell by 1.1% and remained 21.5% below pre-pandemic levels.