In April, a little over 47,000 home-sale agreements in the U.S. fell through, accounting for an estimated 13.4% of all properties under contract. According to a recent study from Redfin, that is somewhat lower (approximately -0.1 percentage points) than it was a month ago. Although the number has fluctuated by less than half a percentage point over the past year and a half, it is tied with January for the lowest level of contract cancellations since September 2024.
After years of instability, contract cancellations have gradually decreased this spring as buyers and sellers have a better understanding of the state of the property market. In order to hold agreements together, more sellers are willing to cut prices and/or make concessions after realizing that majority of the country is a buyer’s market. As pending house purchases increase, buyers may be less likely to back out due to sticker shock when they see their final monthly payments because they have become more acclimated to high housing expenses. Further, for three weeks in a row in April, the average 30-year fixed mortgage rate dropped, which gave some purchasers confidence in locking in a rate. Keep in mind that in May, mortgage rates increased once more.
Nevertheless, compared to late 2020, 2021, and early 2022, when it was a hot seller’s market, home-purchase agreements are failing more frequently. This is due to the fact that there are more home sellers than purchasers in the market, allowing buyers to withdraw during the inspection time if they discover a better property. Widespread economic uncertainty, including worries about job security and the Iran war, is also causing some purchasers to reconsider.
“We’re seeing some buyers cancel purchase agreements, but no more than usual, and when buyers do back out it’s typically because of post-inspection repair costs and appraisals,” said Timothy Hourigan, a Redfin Premier agent in Syracuse, NY. “Buyers are generally committed because supply is tight enough that they’re excited to find a home they love in their price range. In places like Syracuse, where homes are affordable compared to nearby big cities, bidding wars are more common than backing out.”
Where are Cancellations Most Popular Throughout the U.S.?
Due in large part to their status as major buyer’s markets, buyers are more likely to back out of home-buying agreements in Texas, Florida, and other Sun Belt metropolitan areas than in other parts of the United States. This is due to the fact that there are more home sellers than purchasers in the market, allowing buyers to withdraw during the inspection time if they discover a better property. Widespread economic uncertainty, including worries about job security and the Iran war, is also causing some purchasers to reconsider. The Sun Belt is also seeing many cancellations.
Top five metros where cancellations are most common:
- Atlanta (19.3%)
- San Antonio (18.9%)
- Fort Worth, Texas (17.6%)
- Tampa, FL (17.4%)
- Phoenix (17%)
San Francisco has the lowest rate of contract cancellations, with only 2.8% of transactions failing in April. Due in significant part to its position as the center of artificial intelligence, San Francisco’s housing market is flourishing. Nassau County, NY (3.3%), San Jose, CA (6.8%), Montgomery County, PA (7.5%), and New York (7.5%) follow. There are only seven seller markets in the U.S., including San Francisco, Nassau County, and Montgomery County. The study showed that buyers in those areas rarely back out because it might be difficult to find another home to buy if they do.
On the other hand, in around half of the 50 most populous U.S. metro areas, contract cancellations decreased month-over-month on a seasonally adjusted basis. The popular Orlando, FL, metro saw the largest decrease, with 16.8% of home-purchase agreements cancelled in April compared to 18.5% in March. Next are San Francisco (2.8%, down from 4.3%) and New Brunswick, NJ (8.8%, down from 10.3%).
Detroit saw the biggest rise in contract cancellations, up 2.8 percentage points (from 14.1% to 16.9%) from a month prior on a seasonally adjusted basis. Nashville, TN (14.2%, up from 12.6%), and Houston (15.9%, up from 14.8%) are next. Overall, contract cancellations are seemingly moderating, but with such a volatile and unpredicatble housing market, that may change by the end of 2026.
To read the full report, click here.
