Home-Purchase Contract Cancellations Surge Across the U.S., Driven by Market Uncertainty and Buyer Hesitation
A new report from Redfin, the technology-powered real estate brokerage under Rocket Companies, shows that more than 53,000 home-purchase agreements were canceled nationwide in September. This represents approximately 15% of all homes that went under contract during the month, a notable increase from 13.6% a year earlier. The findings highlight a growing trend of “ghosting” in the housing market, where prospective buyers pull out of agreements after initiating the purchase process, leaving sellers in a state of uncertainty.
The rise in contract cancellations is not uniform across the country. Certain regions are experiencing much higher rates of deal breakdowns, particularly in Florida and Texas. Tampa led the nation in September, with 20.1% of home-purchase agreements canceled, up from 17.7% a year earlier. San Antonio followed closely behind, with 19% of deals falling through, compared to 16.8% previously. Other major metro areas seeing frequent cancellations include Fort Worth, Dallas, Orlando, Fort Lauderdale, and Jacksonville. These cities have become hotbeds of canceled deals, reflecting broader trends in buyer behavior and market dynamics.
Why Buyers Are Walking Away
A variety of factors are driving this wave of contract cancellations, many of which revolve around differing expectations between buyers and sellers. Buyers today often enter the market with high standards, expecting properties to meet their exact needs and preferences. They are increasingly unwilling to compromise, particularly when it comes to home repairs, concessions, or price negotiations. Sellers, on the other hand, aim to protect their investments and often maintain firm price expectations. Those who purchased during the pandemic may be especially reluctant to negotiate, as selling for less than their purchase price would result in a financial loss.
Jo Chavez, a Redfin Premier agent based in Kansas City, Missouri, notes that a common trend among buyers is post-offer anxiety, often referred to as “buyer’s remorse.” She explains, “Buyers make an offer, then they start worrying they could have found a better deal or a better home because there are more home sellers than buyers in the market. Some other buyers are backing out because they’re concerned about job security.”
Economic uncertainty, including fears of layoffs or salary reductions, is also influencing buyer behavior. With mortgage rates remaining high and home prices elevated, many buyers are reassessing whether a given property truly represents the best value for their investment. In this climate, it is not unusual for buyers to rescind their offers if they feel the risk outweighs the potential benefit.
Sun Belt Markets Hit Hard
The surge in canceled home-purchase agreements is particularly pronounced in the Sun Belt. This region, which includes Florida, Texas, Arizona, and Nevada, saw an influx of buyers during 2021 and 2022. Its relative affordability, warm climate, and quality of life made it a popular destination for migration, with cities such as Tampa, Orlando, and Las Vegas leading the trend. However, the boom in demand drove home prices upward, reducing affordability for many buyers.
Additional challenges have emerged in the Sun Belt, including rising homeowners’ association (HOA) fees, insurance premiums, and heightened awareness of climate-related risks like hurricanes and flooding. These factors, combined with an ample supply of new construction in many Sun Belt metros, have given buyers the confidence to walk away from agreements, knowing alternative options are available. Economic uncertainty at the national level further exacerbates hesitancy, prompting would-be homeowners to pause or reconsider their purchase decisions.
The Inspection Period: A Critical Stage
Data from Redfin indicates that most canceled contracts occur during the inspection period, a pivotal phase of the home-buying process. More than 70% of deal cancellations happen during this window, when buyers formally assess the condition of the property and request necessary repairs or price adjustments.
In a buyer’s market, where supply exceeds demand in many areas, buyers have leverage to negotiate aggressively. They may request repairs, price reductions, or other concessions based on the findings from inspections. Sellers who resist these requests often see buyers walk away. Moreover, buyers shopping for lower-priced homes are especially likely to encounter inspection issues, which increases the likelihood of cancellations.
The broader impact of these cancellations is also influencing seller behavior. Many potential sellers are delaying or reconsidering listing their homes, recognizing that the current market presents significant uncertainty and that deals may fall through even after a contract is signed. This feedback loop can contribute to slower overall market activity.
Markets With Fewer Cancellations
While some regions are experiencing high cancellation rates, other metros are seeing relatively low levels of contract breakdowns. San Francisco, San Jose, and Nassau County, New York (Long Island) reported the lowest percentages of canceled agreements in September, each under 7%. Other high-cost cities, such as Seattle, New York City, and Boston, also fall among the top ten metros where buyers are least likely to back out.
Many of these low-cancellation markets share certain characteristics: limited inventory and strong demand. In these areas, buyers face fewer alternatives, making them more committed once they make an offer. Balanced markets, where neither buyers nor sellers dominate, such as Milwaukee, Montgomery County (PA), and Minneapolis, also tend to have lower cancellation rates. In these locales, the relative scarcity of listings encourages buyers to move forward with confidence.
Despite their generally low cancellation rates, some of these markets have still experienced notable increases over the past year. San Jose, for instance, saw cancellations climb by 4.2 percentage points. Nashville (+4), Warren (+3.5), Virginia Beach (+3.4), and Oakland (+3.2) also saw substantial year-over-year increases. Overall, contract cancellations rose in 44 of the 50 most populous U.S. metros, suggesting that the phenomenon is widespread and not confined to high-growth Sun Belt regions.
What This Means for the Housing Market
The rise in contract cancellations signals broader challenges within the housing market. It reflects a growing divide between buyer expectations and seller realities, influenced by high home prices, rising interest rates, and economic uncertainty. Buyers are becoming increasingly selective, seeking properties that meet exacting standards while negotiating for concessions and favorable terms. Sellers, meanwhile, are navigating a market where holding firm on price or refusing concessions can lead to canceled deals.
For potential homebuyers, understanding these trends is critical. The data suggests that markets with abundant inventory may allow for more flexibility and options, but buyers in such regions must be prepared for negotiation challenges and potential deal fallout. Conversely, in tight, high-cost markets, limited inventory can create urgency but may also elevate competition and bidding pressure.
For sellers, the current climate highlights the importance of clear communication and realistic expectations. Pricing a home appropriately, addressing anticipated inspection issues, and being willing to negotiate in good faith can reduce the likelihood of a canceled contract. At the same time, sellers should be prepared for delays and potential setbacks, particularly in markets where cancellations are trending upward.
