Realtors are experiencing more buyers backing out of home purchases, as increasing selectiveness emerges in a challenging real estate market.
A report from Redfin, released Tuesday, indicates that nearly 56,000 home-purchase agreements were canceled in June, accounting for 15% of all homes that went under contract that month. This marks the highest cancellation rate recorded for any June by the real estate site.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributes these cancellations to more discerning buyers who are facing a costly housing market. She noted, “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” with last-minute dropouts over trivial concerns. In Miami alone, about 2,500 home purchases were canceled last month, representing approximately 17.6% of homes under contract in June. However, Corrales highlighted that the primary challenge remains affordability.
In June, the median home sale price soared to a record $442,525, while the average interest rate for a 30-year mortgage reached 6.92%. Alongside the elevated home prices and mortgage rates, prospective buyers are further burdened by costs such as insurance, property taxes, HOA fees, and other expenses related to homeownership, all of which have been intensified by inflation.
The affordability crisis in the housing market has led to the most significant decline in home sales in eight months, according to Redfin. Home sales fell by 0.5% in June, marking the largest monthly decrease since October 2023. On a year-over-year basis, sales decreased by 1.1%, coming in 21.5% below pre-pandemic levels.