Nearly 58,000 U.S. home-purchase agreements were canceled in July, equal to 15.3% of homes that went under contract during the month, according to a Redfin analysis of MLS data.
That marks the highest July cancellation rate since the company began tracking the metric in 2017 — and up from 14.5% a year ago.
Analysts point to high home prices, elevated mortgage rates and economic uncertainty as key reasons why deals are collapsing.
With more homes on the market than in recent years, buyers also have greater leverage and sometimes walk away during inspections if they find a better option or encounter issues they don’t want to address.
Cleveland real estate agent Bonnie Phillips said cancellations are especially common among buyers using Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans.
“I recently had an older first-time buyer get cold feet the week before the deal was supposed to close,” she said. “It was a beautiful house, we got it for the price she wanted and there were no issues in the inspection, but her neighbors convinced her that owning is too much of a hassle and she should rent instead.”
Regional differences
San Antonio saw the highest share of failed deals in July, with 22.7% of agreements canceled.
Fort Lauderdale, Florida (21.3%); Jacksonville (19.9%); Atlanta (19.7%); and Tampa (19.5%) followed. Redfin’s analysis covered the 50 most populous metro areas — including 44 with sufficient data.
Texas and Florida — the nation’s top states for new-home construction — also had some of the highest cancellation rates. In Florida, concerns about natural disasters, along with rising insurance premiums and homeowners association fees, are pushing some buyers to walk away.
At the other end, contracts were least likely to fall through in Nassau County, New York (5.1%); Montgomery County, Pennsylvania (8.2%); Milwaukee (8.3%); New York City (9.5%); and Seattle (10.2%).
Biggest year-over-year shifts
Virginia Beach, Virginia, recorded the largest annual increase in its cancellation rate, with 16.1% of deals canceled in July, up from 12.5% a year earlier.
Newark, New Jersey (+3.3 percentage points); Baltimore (+3 points); San Antonio (+2.8 points); and Houston (+2.8 points) also saw notable jumps. Virginia Beach has the highest share of VA loan holders among major metros, with Baltimore close behind.
Meanwhile, cancellations dropped in 11 metros. Phoenix saw the biggest decline (-2.4 points), followed by Orlando (-1.4); Tampa (-1.3); Sacramento, California (-1.3); and Philadelphia (-1.2).
Redfin also noted that mortgage rates have begun to ease and housing supply is edging lower, conditions that could spur some buyers back into the market and make them less likely to back out of contracts.
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