Realtors are experiencing an increase in buyers backing out of home-purchase agreements, as individuals become more selective in a challenging real estate environment.
According to a report from Redfin released on Tuesday, nearly 56,000 home-purchase agreements were canceled in June, representing 15% of all homes that entered contracts that month. This marks the highest cancellation percentage recorded for June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in last-minute cancellations to a more discerning buyer pool facing high market costs. She noted that buyers are withdrawing due to minor concerns because the monthly expenses linked to purchasing a home are too significant to overlook without fulfilling their essential requirements.
Rafael Corrales, a Redfin agent in Miami, reported witnessing challenging scenarios, including last-minute cancellations over trivial issues. In Miami alone, approximately 2,500 home purchases were called off in June, amounting to about 17.6% of homes that were under contract. Corrales emphasized that the main issue is affordability in the current market.
The median home sale price soared to a record $442,525 in June, with the average interest rate on a 30-year mortgage hovering around 6.92%. Coupled with high home prices and elevated mortgage rates, potential buyers are also grappling with rising costs from insurance, property taxes, HOA fees, and other expenses linked to homeownership, all exacerbated by inflation.
The affordability crisis in the housing market has resulted in a significant downturn in home sales nationwide, as reported by Redfin. Home sales dropped by 0.5% month-over-month in June, marking the largest decline since October 2023. Compared to the same month last year, home sales decreased by 1.1%, and they remain 21.5% lower than pre-pandemic figures.