Realtors are encountering an increasing number of buyers backing out of home purchases, as a more selective market emerges amid challenging real estate conditions.
According to a report from Redfin, 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 recorded for June by the real estate site.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers who are more discerning and facing higher costs in the current market.
“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.
In Miami, Redfin agent Rafael Corrales noted alarming trends, including last-minute cancellations over small details, with approximately 2,500 home purchases being canceled last month—about 17.6% of homes that entered contracts in June. He pointed out that affordability remains the foremost challenge.
The median home sale price hit a record high of $442,525 in June, while the average 30-year mortgage rate stood at 6.92%. Besides these high home prices and mortgage rates, potential buyers are also grappling with insurance, property taxes, HOA fees, and additional expenses related to homeownership, all of which have been intensified by inflation.
Nationwide, the decline in affordability has led to a significant drop in home sales, which experienced their largest decrease in eight months, as reported by Redfin. Month over month, home sales fell by 0.5% in June, marking the most considerable drop since October 2022. Year over year, sales decreased by 1.1% and remained 21.5% below levels seen before the pandemic.