Realtors are facing an unprecedented number of buyers backing out of home purchases as consumers become more selective in a challenging real estate market.
In June, nearly 56,000 home-purchase agreements fell through, representing 15% of all homes under contract that month, according to a recent report from Redfin. This marks the highest percentage for any June recorded by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent from the San Francisco Bay Area, attributes the increase in buyers walking away to a more discerning clientele feeling the strain of escalating market prices.
“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.
Rafael Corrales, a Redfin agent in Miami, noted experiencing “nightmare scenarios” with last-minute cancellations due to trivial concerns. In June, around 2,500 home purchases were canceled in Miami alone, accounting for approximately 17.6% of homes that went under contract that month. However, Corrales emphasized that the core issue lies in affordability.
The median home sale price reached a record $442,525 in June, with the average rate on a 30-year mortgage at 6.92%. In addition to high home prices and mortgage rates, prospective buyers are grappling with increased costs related to insurance, property taxes, HOA fees, and other expenses linked to homeownership that have been worsened by inflation.
The significant lack of affordability across the nation has contributed to a notable decline in home sales, which have seen their largest drop in eight months, as reported by Redfin. Month-over-month, home sales decreased by 0.5% in June, the largest decline since October 2023. Year-over-year, sales dropped by 1.1% and were 21.5% lower than levels observed before the pandemic.