Realtors are encountering an increasing number of buyers who are backing out of deals, as individuals become more discerning in a challenging real estate market.
Nearly 56,000 agreements for home purchases were canceled in June, representing 15% of all homes that came under contract that month, according to a Redfin report released on Tuesday. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers becoming more selective as they navigate a costly market.
“They’re opting out over minor issues because the monthly expenses associated with buying a home are too significant to justify not fulfilling their entire wish list,” Zubiate noted.
Rafael Corrales, another Redfin agent based in Miami, shared that he has witnessed troubling situations, including last-minute cancellations over trivial matters. In June, approximately 2,500 home purchases were canceled in Miami, equating to about 17.6% of homes that went under contract. However, Corrales emphasized that the primary concern remains affordability.
The median home sale price reached an unprecedented $442,525 in June, with the average 30-year mortgage rate at 6.92%. Alongside the elevated home prices and persistent high mortgage rates, potential buyers face additional burdens from insurance, property taxes, HOA fees, and other expenses linked to homeownership, all amplified by inflation.
The national struggle with affordability has led to the most significant drop in home sales in eight months, according to Redfin. On a monthly basis, home sales decreased by 0.5% in June, marking the largest decline since October 2022. Year-over-year, home sales fell by 1.1% and were 21.5% lower than levels seen before the pandemic.