Realtors are facing a growing number of buyers who are backing out of home purchases, as individuals become more selective in a challenging real estate market.
According to a recent Redfin report, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributes this phenomenon to a more discerning buyer demographic that is confronting a pricier market. She noted, “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.”
Rafael Corrales, a Redfin agent in Miami, highlighted troubling instances of last-minute cancellations over trivial details. In Miami alone, approximately 2,500 home purchases were canceled last month, accounting for about 17.6% of contracts signed in June. However, Corrales emphasized that the overarching concern is affordability.
The median home sale price in June reached an all-time high of $442,525, while the average rate for a 30-year mortgage soared to 6.92%. In addition to the elevated prices and mortgage rates, prospective buyers are also grappling with rising insurance costs, property taxes, homeowners association fees, and other expenses linked to homeownership, which have all been intensified by inflation.
This affordability crisis has led to a significant decline in home sales nationwide, with data from Redfin indicating that June witnessed the largest drop in home sales in eight months. On a monthly basis, sales decreased by 0.5% in June, marking the largest drop since October 2023. Year-over-year, home sales fell by 1.1% and were 21.5% below pre-pandemic levels.