Realtors are facing a surge in buyers backing out of home purchases, as consumers become more selective in a challenging real estate environment.
In June, nearly 56,000 home-purchase agreements were canceled, representing 15% of all homes that went under contract that month, according to a report released by Redfin. This marks the highest cancellation rate for June recorded by the company.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the increase in cancellations to buyers being more discerning amid rising costs. She explained that buyers are withdrawing due to minor concerns because the financial implications of purchasing a home have become too significant to overlook.
Rafael Corrales, a Redfin agent in Miami, described witnessing “nightmare scenarios” stemming from last-minute changes of heart over trivial issues. In Miami alone, approximately 2,500 home sales were canceled in June, which represents about 17.6% of homes that entered contracts that month. Corrales emphasized that the core issue is affordability.
The median home sale price soared to a record $442,525 in June, while the average rate for a 30-year mortgage hit 6.92%. Prospective buyers are also burdened by rising costs associated with homeownership, including insurance, property taxes, and homeowners association fees, all further complicated by inflation.
This significant lack of affordability has contributed to the largest decline in home sales observed in eight months, according to Redfin. On a monthly basis, home sales dipped by 0.5% in June, marking the most considerable decline since October 2022. Year-over-year, home sales dropped by 1.1%, and they remain 21.5% below levels seen before the pandemic.