J
anuary saw the highest home sales cancellation rate in 8 years, with over 41,000 purchase agreements falling through, representing 14.3% of all contracts signed that month. This marks a significant increase from 13.4% a year earlier and the highest cancellation rate for this time of year since at least 2017.

    Buyers are backing out due to increased housing supply, declining demand, economic uncertainty, and high costs and mortgage rates. With more options available, buyers are opting out during the inspection period in search of better deals. Economic instability, including tariffs, layoffs, and federal policy changes, is also causing hesitation among buyers and sellers.

    Mortgage rates remain elevated at 6.96%, with home prices up 4.1% year-over-year. This combination of high costs and economic uncertainty is prompting some buyers to reconsider their purchases. "I'm seeing more buyers back out than usual," said Sam Brinton, a Redfin agent in Salt Lake City.

    Some Redfin agents advise buyers to monitor properties they previously lost in bidding wars, as cancellations can lead to new opportunities. The highest cancellation rates were seen in Atlanta (19.8%), Orlando (18.2%), Las Vegas (17.9%), Houston (17.8%), and Jacksonville (17.8%). Florida's housing market is cooling due to rising insurance and HOA fees.

    In contrast, markets like San Francisco (4.1%), San Jose (5.9%), Nassau County (6.8%), Oakland (8.4%), and Seattle (8.7%) favor sellers, as limited inventory means buyers have fewer alternatives if they withdraw from a deal. Los Angeles saw 15.9% of pending home sales fall through in January, the highest for this time of year since 2017, due to wildfires disrupting the local market.