Realtors are experiencing an increase in buyers backing out of home purchases, as individuals become more selective in a challenging real estate market.
A recent report from Redfin revealed that nearly 56,000 home-purchase agreements were abandoned in June, accounting for 15% of all homes that went under contract that month. This marks the highest percentage of canceled agreements recorded by the real estate platform for the month of June.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, attributed the rise in cancellations to buyers being more discerning and overwhelmed by the high costs of homeownership. “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 stated.
In Miami, Redfin agent Rafael Corrales reported witnessing “nightmare scenarios” where buyers canceled at the last minute over minor details. Approximately 2,500 home purchases were revoked in Miami last month, equating to around 17.6% of homes under contract in June. Corrales emphasized that the primary concern is affordability.
The median home sale price reached an all-time high of $442,525 in June, alongside an average 30-year mortgage rate of 6.92%. In addition to the steep prices of homes, buyers are burdened by rising insurance, property taxes, HOA fees, and other homeownership expenses that have been worsened by inflation.
The national affordability crisis has led to the largest decrease in home sales seen in eight months, as per the Redfin report. Month-over-month, home sales fell by 0.5% in June, marking the most significant decline since October 2022. Compared to a year earlier, home sales declined by 1.1% and are now 21.5% lower than pre-pandemic levels.