Realtors are facing an increasing number of buyers backing out of home purchases, as consumer preferences shift in a challenging real estate environment.
A recent report from Redfin indicates that nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes under contract for the month. This figure marks the highest percentage for any June recorded by the real estate site.
Julie Zubiate, a Redfin Premier agent based in the San Francisco Bay Area, attributes the trend to buyers being more selective due to the escalating costs associated with homeownership. She stated, “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.”
Similarly, Rafael Corrales, a Redfin agent in Miami, reported experiencing “nightmare scenarios” where last-minute cancellations occur over trivial concerns. In Miami alone, about 2,500 home purchases were canceled in June, equating to roughly 17.6% of homes that went under contract. However, Corrales emphasized that the core problem lies in affordability.
As of June, the median home sale price reached an all-time high of $442,525, while the average 30-year mortgage interest rate stood at 6.92%. In addition to the high home values and continued elevated mortgage rates, potential buyers are also hindered by rising insurance, property taxes, homeowner association fees, and other expenses associated with ownership, all of which have been affected by inflation.
This overall lack of affordability in the housing market has led to the most significant decline in home sales observed in eight months, as reported by Redfin. Month-over-month, home sales dropped by 0.5% in June, marking the largest decrease since October 2022. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than pre-pandemic levels.