Just over 57,000 home-sale agreements nationwide were canceled in June, equal to 14.9 percent of homes that went under contract that month, according to a new report from Redfin. That’s up from 13.9 percent a year earlier and is the highest June share in records dating back to 2017.
Pending home sales are falling through at a higher rate than in the past largely because it’s a buyer’s market, according to Redfin’s report. There are hundreds of thousands more U.S. home sellers than buyers, giving buyers more options to choose from and more negotiating power. Buyers have room to be picky; they may back out during the inspection period if a better home comes up for sale or they discover an issue they don’t want to fix.
Finances are the other major reason buyers are backing out of deals, according to the Redfin report. U.S. home-sale prices are at record highs, and while monthly mortgage payments have fallen a bit, they’re still near their all-time high. Some would-be buyers are canceling purchases when the reality of their monthly payment sets in. Additionally, Redfin agents report some buyers are canceling because they’re nervous about economic uncertainty surrounding issues like tariffs, inflation and the possibility of a recession.
“Buyers have leverage,” Dallas-based Redfin Premier agent Crystal Zschirnt said in a release. “Some buyers are canceling deals because another home pops up in the same price range that they like better, or because they discover a flaw and get nervous it’ll cost too much to fix. I’ve also heard of some buyers backing out because they’re hoping home prices or mortgage rates are going to plummet soon, even though that’s unlikely.”
Redfin expects home prices to decline 1 percent year-over-year nationwide by the end of 2025, and mortgage rates to remain essentially unchanged in the 6.8 percent range.
In some cases, sellers are working hard to keep transactions from falling apart.
“Sellers are willing to make deals because in today’s buyer’s market, they don’t want to lose out on a sale once they have a buyer under contract,” Phoenix-based Redfin Premier Agent Van Welborn said. “A few years ago, when the market was more competitive, sellers were able to tell buyers to move on rather than pay for repairs found during the inspection period. Now, sellers are doing whatever they can to close the deal. I have one buyer who discovered a septic issue on an ultra-luxury home and was able to talk the seller into reducing the price by $1 million.”
In Jacksonville, Fla., more than one in five (21.4 percent) home-purchase agreements were canceled in June, the highest share of 44 major U.S. metros Redfin analyzed. It’s followed by Las Vegas (19.7 percent) and Atlanta (19.6 percent).
The Sun Belt is home to all of the metros with the highest cancellation rates: San Antonio; Tampa; Orlando; Riverside, Calif.; Phoenix; Fort Worth, Texas; and Miami round out the top 10. Cancellations are especially common in Florida and Texas in part because there’s a lot of new construction, giving buyers a lot of inventory to choose from. Some buyers in those areas are backing out due to sky-high insurance quotes related to the increasing frequency of natural disasters.
On the other end of the spectrum, 5.4 percent of home-purchase agreements in Nassau County, N.Y. were canceled in June, the lowest share of the metros Redfin analyzed. It’s followed by Montgomery County, Pa. (6.8 percent) and Milwaukee (8.2 percent).