Realtors are encountering an increasing number of buyers who are backing out of home purchases, as consumers become more selective in a challenging real estate market.
According to a report from Redfin released on Tuesday, nearly 56,000 home purchase agreements fell through in June, representing 15% of all homes that went under contract that month. This marks the highest percentage recorded for any June by the real estate platform.
Julie Zubiate, a Redfin Premier real estate agent based in the San Francisco Bay Area, attributed the surge in buyers backing out to a more discerning clientele facing a costly 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, another Redfin agent working in Miami, reported seeing “nightmare scenarios” unfold, including last-minute cancellations over trivial matters. In Miami alone, approximately 2,500 home purchases were cancelled last month, amounting to about 17.6% of homes that went under contract in June. Corrales emphasized that the primary concern remains affordability.
In June, the median home sale price hit a record $442,525, while the average interest rate on a 30-year mortgage stood at 6.92%. In addition to the already high home prices and ongoing elevated mortgage rates, potential buyers are also facing an array of expenses, including insurance, property taxes, and HOA fees, all of which have been intensified by inflation.
The nationwide lack of affordability has resulted in the largest decline in home sales in eight months, according to Redfin. Monthly home sales experienced a decrease of 0.5% in June, the biggest reduction since October 2023. Year-over-year, home sales dropped by 1.1%, and they were 21.5% lower than pre-pandemic levels.