Realtors are facing an unprecedented number of buyers backing out of home purchases, as potential homeowners become more selective amidst a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, making up 15% of all homes that were under contract that month. This marks the highest percentage of cancellations recorded for June by the real estate company.
Julie Zubiate, a Redfin Premier agent in the San Francisco Bay Area, attributed the increase in buyers backing out to the high costs associated with home ownership, leading buyers to be more stringent about their requirements. “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 agent from Redfin in Miami, highlighted the troubling trend of last-minute cancellations over trivial details, with roughly 2,500 home purchases canceled in Miami in June, representing about 17.6% of homes that went under contract. Corrales pointed out that affordability remains the predominant issue.
In June, the median home sale price hit a record high of $442,525, while the average interest rate on a 30-year mortgage climbed to 6.92%. Alongside the elevated home prices and mortgage rates, buyers are also burdened by rising costs associated with insurance, property taxes, homeowner association dues, and other expenses, all intensified by inflation.
The nationwide affordability crisis has led to the most significant drop in home sales in eight months, as reported by Redfin. On a month-over-month basis, home sales fell by 0.5% in June, representing the largest decline since October 2023. Year-over-year, sales dipped by 1.1% and were 21.5% lower than pre-pandemic levels.