Realtors are experiencing a rise in buyers backing out of home purchases, as potential homeowners become more selective in a challenging real estate market.
According to a Redfin report released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This is the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributes this increase in 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.”
Rafael Corrales, another Redfin agent in Miami, reported witnessing frustrating last-minute cancellations over minor details. In Miami, around 2,500 home purchases were scrapped in June, which constitutes about 17.6% of homes that went under contract in the same month. Corrales also pointed out that affordability remains the primary concern.
The median home sale price hit a record $442,525 in June, while the average rate for a 30-year mortgage stood at 6.92%. In addition to high property prices and elevated mortgage rates, prospective buyers are facing additional burdens from insurance, property taxes, HOA fees, and other costs related to homeownership that have been affected by inflation.
This widespread lack of affordability has led to the most significant decline in home sales nationwide in eight months, according to Redfin. On a monthly basis, home sales dropped by 0.5% in June, marking the largest decrease since October 2023. Year-over-year, home sales decreased by 1.1% and were down 21.5% compared to pre-pandemic levels.