Realtors are facing an unprecedented number of buyers backing out of home purchases, as potential homeowners are becoming increasingly selective in a challenging real estate environment.
According to a report from Redfin, nearly 56,000 home-purchase agreements fell through in June, representing 15% of all homes that were under contract that month. This marks the highest percentage recorded for June by Redfin.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed this rise in cancellations to buyers who are hesitant due to the high costs associated with home purchases. “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 based in Miami, reported “nightmare scenarios” unfolding, including last-minute cancellations over trivial details. In Miami alone, around 2,500 home purchases were canceled in June, which accounts for approximately 17.6% of homes that went under contract. Corrales emphasized that the primary concern among buyers is affordability.
The median home sale price hit a record high of $442,525 in June, while the average rate for a 30-year mortgage rose to 6.92%. In addition to these high home prices and elevated mortgage rates, potential buyers are also contending with rising insurance, property taxes, HOA fees, and other costs of homeownership that have been affected by inflation.
This lack of affordability has contributed to the largest decline in home sales in eight months, according to Redfin. Monthly home sales fell by 0.5% in June, marking the most significant decrease since October 2023. Year-over-year, home sales dipped by 1.1% and were 21.5% lower than pre-pandemic levels.