Realtors are currently experiencing a surge in buyers backing out of home purchases, as potential homeowners grow increasingly selective in the challenging real estate market.
According to a report from Redfin, nearly 56,000 home-purchase agreements, or 15% of all homes that went under contract in June, fell through. This marks the highest percentage recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the increase in buyer cancellations to the higher costs associated with home buying. “They are withdrawing due to minor issues because the monthly expenses of purchasing a home today are too significant to overlook without checking off everything on their must-have list,” Zubiate explained.
Rafael Corrales, another Redfin agent in Miami, reported witnessing “nightmare scenarios” where buyers canceled deals at the last moment over small details. In Miami alone, around 2,500 home purchases were canceled last month, representing approximately 17.6% of homes that went under contract in June. Yet, Corrales highlighted that the primary issue remains affordability.
In June, the median home sale price reached a record high of $442,525, while the average rate on a 30-year mortgage hit 6.92%. In addition to the elevated home prices and still-high mortgage rates, prospective homebuyers are also facing increased costs from insurance, property taxes, HOA fees, and other expenses tied to homeownership, all worsened by inflation.
Redfin’s findings indicate that the market’s lack of affordability has led to the most significant decline in home sales in eight months. On a month-to-month basis, home sales fell by 0.5% in June, the steepest drop since October 2023. Furthermore, compared to the previous year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.