Real estate agents are encountering an increasing number of hesitant buyers as individuals become more selective in a challenging 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 were under contract during that month. This marks the highest cancellation rate recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent operating in the San Francisco Bay Area, attributes the rise in cancellations to a more discerning buyer pool facing a costly 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 remarked.
Rafael Corrales, a Redfin agent in Miami, also noted significant last-minute cancellations over trivial matters, pointing out “nightmare scenarios” witnessed recently. In Miami, approximately 2,500 home purchases were called off last month, representing around 17.6% of homes that went under contract in June. However, Corrales highlighted that the primary issue at play is affordability.
In June, the median home sale price reached an all-time high of $442,525, alongside an average mortgage rate of 6.92% for a 30-year loan. Additionally, potential buyers are facing rising costs related to insurance, property taxes, homeowners association fees, and other ownership expenses, all intensified by inflation.
The nationwide lack of affordability has led to the most significant decline in home sales seen in eight months, per Redfin’s findings. Month-over-month sales fell by 0.5% in June, marking the steepest decline since October 2023. Year-over-year, home sales decreased by 1.1% and were 21.5% lower than levels prior to the pandemic.