Real estate agents are facing an increase in buyers backing out of home purchases, as potential homeowners become more selective amidst challenging market conditions.
In June, nearly 56,000 home-purchase agreements fell through, accounting for 15% of all homes that went under contract that month, marking the highest percentage recorded for June, according to a report by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the surge in buyer hesitance to the high costs associated with home ownership. “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 explained.
Rafael Corrales, another Redfin agent based in Miami, reported witnessing numerous last-minute cancellations over small details, leading to about 2,500 home purchase cancellations in the city last month, or roughly 17.6% of homes that went under contract in June. He emphasized that the primary concern remains affordability.
The median home sale price hit a record $442,525 in June, while the average interest rate for a 30-year mortgage was recorded at 6.92%. Alongside these steep home prices and persistent mortgage rates, potential buyers are also challenged by rising insurance costs, property taxes, HOA fees, and other expenses related to homeownership, all intensified by inflation.
The widespread lack of affordability has led to the most significant decline in home sales nationwide in eight months, according to Redfin. Home sales fell by 0.5% from the previous month, representing the largest decrease since October 2023. Compared to the same time last year, home sales dropped 1.1% and were 21.5% lower than pre-pandemic levels.