Realtors are facing an increasing number of buyers backing out of home purchases, with heightened selectiveness evident in a challenging real estate market.
A recent Redfin report revealed that nearly 56,000 home-purchase agreements fell through in June, representing 15% of homes that entered into contracts that month. This marks the highest percentage for June on record.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, noted that buyers are more prone to cancel due to minor issues, as the costs associated with buying a home have risen significantly. “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,” Zubiate explained.
Rafael Corrales, another Redfin agent based in Miami, pointed out that he has encountered “nightmare scenarios” involving last-minute cancellations over small details. In June, approximately 2,500 home purchases were canceled in Miami alone, equating to about 17.6% of homes under contract that month. Corrales highlighted that the primary concern remains affordability.
The median home sale price reached a record high of $442,525 in June, alongside an average mortgage rate of 6.92% for a 30-year loan. Beyond the high home prices and elevated mortgage rates, prospective buyers are also burdened by additional costs such as insurance, property taxes, and homeowners association fees, all of which have been further strained by inflation.
Nationwide, the declining affordability has contributed to the largest drop in home sales in eight months, as reported by Redfin. Home sales fell by 0.5% in June, the most significant decrease since October 2022. On a year-over-year basis, sales dipped by 1.1%, placing them 21.5% below pre-pandemic levels.