Realtors are facing a notable increase in buyers who are backing out of home purchases, as many become more discerning in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, which accounts for 15% of all homes that went under contract that month. This is the highest percentage recorded for any June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in canceled deals to buyers who are now more selective and struggling to justify costs in a pricey 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.
Rafael Corrales, another Redfin agent based in Miami, reported witnessing significant last-minute cancellations over trivial details. In Miami alone, about 2,500 home purchases were called off in June, equating to roughly 17.6% of the homes that went under contract. Corrales pointed out that the primary issue is affordability.
The median home sale price surged to a record $442,525 in June, coinciding with an average interest rate of 6.92% on a 30-year mortgage. In addition to the high home prices and elevated mortgage rates, potential buyers are facing issues with insurance, property taxes, HOA fees, and other ownership costs that have been heightened by ongoing inflation.
The nationwide lack of affordability has led to a significant decline in home sales, marking the largest drop in eight months, according to Redfin. Month-over-month, home sales decreased by 0.5% in June—the most considerable decline since October 2023. Compared to the previous year, home sales fell by 1.1% and were 21.5% lower than pre-pandemic levels.