\n(NASDAQ: RDFN) \u2014 Just over 41,000 U.S. home-purchase agreements fell through in January, equal to 14.3% of homes that went under contract that month, according to a new report<\/a> from Redfin (redfin.com<\/a>), the technology-powered real estate brokerage. That\u2019s up from 13.4% a year earlier and is the highest cancellation rate for this time of year since at least 2017.<\/p>\n
\nThere are a few reasons today\u2019s homebuyers are skittish:<\/p>\n
- \n
- Supply is rising and demand is falling.<\/b> Housing inventory has risen to its highest level since 2020, giving homebuyers more options. At the same time, pending home sales fell to their lowest level on record (aside from the start of the pandemic) in January. More supply and less demand means the housing market has tilted in buyers\u2019 favor<\/a>, with some house hunters backing out during the inspection period because a better house for them has come along\u2013or at least the promise of a better house.\n<\/li>\n
- Economic uncertainty.<\/b> Redfin agents report that some deals are falling through because buyers (and sometimes, sellers) are getting cold feet due to widespread economic and political uncertainty. Tariffs, layoffs, and federal policy changes are among the factors contributing to an air of instability. Some people are choosing to stay put.\n<\/li>\n
- Sticker shock.<\/b> Mortgage rates and home prices remain stubbornly high, with January\u2019s average rate hitting 6.96%, an eight-month high (weekly average rates have since declined to 6.76%), and the median U.S. home-sale price rising 4.1%. Combined with economic uncertainty, high housing costs are causing some would-be buyers to change their minds.\n<\/li>\n<\/ul>\n
\n\u201cI\u2019m seeing more homebuyers back out of deals than usual, and I\u2019m hearing the same from other agents and mortgage lenders in the area,\u201d said Sam Brinton<\/a>, a Redfin agent in Salt Lake City, UT. \u201cSome buyers are getting cold feet with everything going on in the world. But even with more cancellations, there are also more buyers out there in general. The nice homes in desirable locations are selling quickly, and those buyers are less likely to cancel.\u201d<\/p>\n
\nBecause a fair amount of sales are falling through, some Redfin agents are advising buyers to keep a close eye on homes they want to buy\u2013even if they lost a bidding war for it. \u201cIt\u2019s worth checking in with the listing agent about a week after the house goes under contract,\u201d said Alison Williams<\/a>, a Sacramento Redfin Premier<\/a> agent. \u201cTwice since the start of the year, I\u2019ve found out the original buyer canceled the contract, and my clients were able to get their offers accepted before the home went back on the market.\u201d<\/p>\n
\nThe portion of home-purchase agreements that are getting canceled is above typical levels for the start of the year, but it\u2019s lower than the cancellation spikes Redfin saw at the start of the pandemic and in late 2022. A record 16.4% of deals were canceled in March 2020, when the onset of the pandemic scared away many buyers. And nearly as many deals were canceled in October 2022, when mortgage rates soared above 7% for the first time in 20 years. That development that sidelined a lot of house hunters and gave the ones who remained more leeway to back out of contracts if a home wasn\u2019t perfect.<\/p>\n
Florida, Other Parts of the South Are Seeing Highest Share of Deals Falling Through<\/b><\/p>\n
\nAtlanta leads the nation in canceled deals, with one in five (19.8%) of January\u2019s pending home sales canceled. It\u2019s followed by Orlando, where 18.2% of deals were canceled, Las Vegas (17.9%), Houston (17.8%) and Jacksonville, FL (17.8%). This analysis includes the 50 most populous U.S. metros.<\/p>\n
- Economic uncertainty.<\/b> Redfin agents report that some deals are falling through because buyers (and sometimes, sellers) are getting cold feet due to widespread economic and political uncertainty. Tariffs, layoffs, and federal policy changes are among the factors contributing to an air of instability. Some people are choosing to stay put.\n<\/li>\n
![\"Logo\"](\"https:\/\/mms.businesswire.com\/media\/20250228835414\/en\/1407505\/3\/Redfin_Standard_Web_Logo.jpg\"){kind=logo}
<\/td>\n<\/tr>\n