Residential Real Estate News
U.S. Home Purchase Cancellations Surge, 1 in 7 Sales Getting Canceled
January recorded the highest home sales cancellation rate in 8 years
New data from Redfin reveals a growing trend of canceled home purchases across the U.S., with the highest rates in the Southeast. In January 2025, more than 41,000 home-purchase agreements fell through, representing 14.3% of all contracts signed that month. This marks an increase from 13.4% a year earlier and the highest cancellation rate for this time of year since at least 2017.
Why Are Buyers Backing Out?
Redfin reports key factors contributing to the rise in cancellations:
- Increased Supply, Declining Demand: Housing inventory has reached its highest level since 2020, providing buyers with more options. Meanwhile, pending home sales hit a record low in January (excluding the early pandemic period). With more choices, buyers are increasingly backing out during the inspection period, hoping to find a better deal.
- Economic Uncertainty: Many buyers--and even some sellers--are hesitating due to concerns over economic and political instability. Factors such as tariffs, layoffs, and federal policy changes are making people think twice before committing.
- High Costs & Mortgage Rates: Despite slight recent declines, mortgage rates remain elevated, with January's average at 6.96%, the highest in eight months. Home prices are also up, with the median sale price rising 4.1% year-over-year. This combination of high costs and economic uncertainty is prompting some buyers to reconsider.
"I'm seeing more buyers back out than usual, and I'm hearing the same from other agents and lenders," said Sam Brinton, a Redfin agent in Salt Lake City. "But there are still plenty of buyers out there. Desirable homes in prime locations are selling fast, and those buyers are less likely to cancel."
Since cancellations are more common, some Redfin agents advise buyers to monitor properties they previously lost in bidding wars. "It's worth checking with the listing agent a week after a home goes under contract," said Alison Williams, a Redfin Premier agent in Sacramento. "I've had clients successfully get their offers accepted after an original buyer backed out."
Where Are Cancellations Happening the Most?
While cancellations remain above typical early-year levels, they are lower than the spikes seen during the pandemic onset and in late 2022, when mortgage rates exceeded 7% for the first time in two decades.
Highest Cancellation Rates:
- Atlanta, GA: 19.8%
- Orlando, FL: 18.2%
- Las Vegas, NV: 17.9%
- Houston, TX: 17.8%
- Jacksonville, FL: 17.8%
Florida's housing market, in particular, is cooling due to rising insurance and HOA fees, as well as increasing concerns over natural disasters. The state's growing housing inventory is also emboldening buyers to walk away if inspection issues arise, knowing they have plenty of alternatives.
Lowest Cancellation Rates:
- San Francisco, CA: 4.1%
- San Jose, CA: 5.9%
- Nassau County, NY: 6.8%
- Oakland, CA: 8.4%
- Seattle, WA: 8.7%
These markets currently favor sellers, as limited inventory means buyers have fewer alternatives if they withdraw from a deal.
Los Angeles Cancellations Hit Eight-Year High Amid Wildfires
Los Angeles saw 15.9% of pending home sales fall through in January, the highest for this time of year since 2017. The devastating Palisades and Eaton wildfires, which destroyed thousands of homes, have significantly disrupted the local housing market.
Other major metros with rising cancellation rates include:
- Detroit, MI: 17.4% (up from 13.1% a year ago)
- Atlanta, GA: 19.8% (up from 16.6%)
- Virginia Beach, VA: 15.2% (up from 12.1%)
- New Brunswick, NJ: 11.8% (up from 9.1%)
- Los Angeles, CA: 15.9% (up from 13.2%)
In contrast, home-purchase cancellations have declined in some areas, including Fort Worth, TX (down to 16.2%), Fort Lauderdale, FL (17.2%), and Philadelphia, PA (11.8%).
With buyers gaining more leverage in certain markets, the trend of home purchase cancellations may continue in the coming months.
