Home sale cancellations hit record high in January

Why sales are falling through

Redfin said several factors are contributing to the spike in failed transactions:

• Rising supply, falling demand: Housing inventory has climbed to its highest level since 2020, giving buyers more choices. Meanwhile, pending home sales hit a record low for January, excluding the early pandemic months. With less competition, some buyers are backing out during the inspection period, hoping for a better deal.
• Economic uncertainty: Concerns about tariffs, layoffs, and federal policy changes are making buyers — and sometimes sellers — hesitate. Many are opting to wait out market instability before committing to a purchase.
• High mortgage rates and Home Prices: The average 30-year fixed mortgage rate hit 6.96% in January, an eight-month high. While rates have since dipped slightly to 6.76%, home prices remain elevated, with the median U.S. home-sale price rising 4.1% year-over-year. The combination of high costs and financial uncertainty has led many would-be buyers to reconsider their purchases.

“I’m seeing more homebuyers back out of deals than usual, and I’m hearing the same from other agents and mortgage lenders in the area,” said Sam Brinton, a Redfin Premier agent in Salt Lake City. “Some buyers are getting cold feet with everything going on in the world. But even with more cancellations, there are still plenty of buyers, and well-priced homes in desirable locations are selling fast.”

South sees highest cancellation rates

Atlanta leads the nation in canceled home sales, with 19.8% of pending deals falling through in January. Other cities with high cancellation rates include:

• Orlando, Fla. – 18.2%
• Las Vegas – 17.9%
• Houston – 17.8%
• Jacksonville, Fla. – 17.8%

Florida is experiencing a slowdown as the state faces rising home insurance costs, HOA fees, and increasing risks from natural disasters. A growing supply of available homes is giving buyers more flexibility to walk away if issues arise during inspections, Redfin added.

At the other end of the spectrum, San Francisco has the lowest cancellation rate at just 4.1%, followed by San Jose, Calif. (5.9%), Nassau County, N.Y. (6.8%), Oakland, Calif. (8.4%), and Seattle (8.7%).

These markets remain seller-friendly, with low inventory and limited buyer alternatives.

Wildfires drive Los Angeles sale cancellations

In Los Angeles, 15.9% of pending home sales fell through in January, marking the highest January cancellation rate since 2017. The Palisades and Eaton wildfires, which destroyed thousands of homes, have disrupted transactions and heightened buyer concerns about property risks.

While cancellation rates remain below pandemic-era peaks — such as March 2020’s record 16.4% — the rising trend indicates continued uncertainty in the housing market.

Some real estate agents are advising buyers to monitor homes they missed out on, as deals are falling through at a higher rate.

“It’s worth checking in with the listing agent about a week after the house goes under contract,” said Alison Williams, a Redfin Premier agent in Sacramento. “Twice since the start of the year, I’ve had clients secure homes because the original buyers backed out before the property was relisted.”

As mortgage rates fluctuate and economic uncertainty persists, the housing market is shifting in favor of buyers, giving them more room to negotiate — or walk away.