Realtors are experiencing an increase in buyers backing out of home purchases, as consumer preferences become more selective amid a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract during that month. This marks the highest percentage of canceled contracts recorded for June.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the uptick in cancellations to buyers being more discerning due to the high costs associated with homeownership. “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.
In Miami, agent Rafael Corrales reported encountering “nightmare scenarios,” where buyers canceled deals last minute over minor details. Approximately 2,500 home purchases were called off in Miami last month, making up about 17.6% of contracts. Corrales highlighted affordability as the major concern for buyers.
The median home sale price surged to a record $442,525 in June, coinciding with an average 30-year mortgage rate of 6.92%. In addition to the high prices, prospective buyers are facing challenges from rising insurance costs, property taxes, HOA fees, and other expenses tied to homeownership, all intensified by inflation.
The ongoing affordability crisis has led to a notable decline in home sales nationally, marking the most significant drop in eight months. According to Redfin, home sales decreased by 0.5% in June, the largest month-to-month decline since October 2023. Compared to the previous year, home sales fell by 1.1% and were down 21.5% from pre-pandemic figures.