Realtors are facing an unprecedented rise in buyers backing out of home purchases as consumers become more selective in the current challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements were canceled in June, which represents 15% of all homes that went under contract that month. This marks the highest percentage recorded for June in the company’s history.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers’ growing selectivity amid escalating costs. “They are backing out due to minor issues because the monthly expenses associated with buying a home today are too high to justify not getting everything on their must-have list,” Zubiate noted.
Rafael Corrales, a Redfin agent in Miami, reported witnessing “nightmare scenarios” where buyers canceled purchases at the last minute over trivial concerns. In Miami alone, around 2,500 home agreements were rescinded in June, equating to roughly 17.6% of homes that went under contract that month, with affordability cited as the primary issue.
The median sale price for homes hit a record high of $442,525 in June, coupled with an average 30-year mortgage rate of 6.92%. In addition to elevated home prices and persistent mortgage rates, prospective buyers are grappling with rising insurance premiums, property taxes, HOA fees, and other ownership costs that have been worsened by inflation.
These affordability challenges have led to the most significant decline in home sales observed in eight months, according to Redfin. Month-over-month, home sales decreased by 0.5% in June, representing the largest fall since October 2023. Compared to the previous year, home sales dropped by 1.1% and remained 21.5% below pre-pandemic levels.