The insights provided are drawn from a Redfin analysis of MLS pending-sales data. As housing data tends to fluctuate with the seasons, this comparison focuses on this July relative to previous Julys. It’s important to understand that if a home sale falls through in a specific month, it might have gone under contract in the preceding month, such as a July cancellation potentially stemming from a June agreement.
There is an increased tendency for home purchases to fail due to high property prices, elevated mortgage rates, and economic uncertainty, which contribute to buyer hesitation. Moreover, with a greater variety of homes available now, buyers often possess the upper hand in negotiations. They’re less likely to rush decisions and might withdraw from a deal during the inspection phase if they find a promising property elsewhere or encounter an issue with the current home they aren’t prepared to resolve.
Bonnie Phillips, a real estate agent with Cleveland Redfin Premier, mentions that common deal-breakers for buyers include uncertainty, demanding standards, and inspection issues, especially for those using FHA and VA loans, where cancellations are more frequent. Sometimes, other motivations influence a buyer’s decision to back out:
“An instance involved a first-time, older buyer who reconsidered just a week before closing,” explained Phillips. “It was an appealing home at a desirable price with a clear inspection, but after talking to her neighbors, she was persuaded that renting would be less burdensome than homeownership.”
Interestingly, there appears to be a slight shift in the housing market dynamics. With mortgage rates gradually declining, buyers who had previously hesitated might re-enter the market. Simultaneously, as the supply of homes decreases, the urgency for buyers could intensify.
Home Purchases Are Most Likely to Fall Through in Texas and Florida
In the case of San Antonio, 730 home contracts were terminated in July, amounting to 22.7% of the homes under contract that month—the highest rate among metros that Redfin reviewed. Following San Antonio were Fort Lauderdale, FL (21.3%), Jacksonville, FL (19.9%), Atlanta (19.7%), and Tampa, FL (19.5%). This analysis encompassed the 50 largest metro areas and included data from 44 with sufficient information.
Florida and Texas have been building more homes than anywhere else in the country, prompting some buyers to back out of deals because they’re confident they will be able to find a different home that works better for them. Some buyers in the Sunshine State are also getting cold feet due to increasing natural disasters and soaring insurance and HOA fees.
Home purchases were least likely to fall through in Nassau County, NY (5.1%), Montgomery County, PA (8.2%), Milwaukee (8.3%), New York (9.5%) and Seattle (10.2%).
Virginia Beach, Newark See Biggest Upticks in Cancellations
In Virginia Beach, VA, nearly 500 home-purchase agreements were canceled in July, equal to 16.1% of homes that went under contract last month. That’s up 3.6 percentage points from 12.5% a year earlier—the largest increase among the metros in this analysis. Rounding out the top five are Newark, NJ (+3.3 ppts), Baltimore (+3 ppts), San Antonio (2.8 ppts) and Houston (2.8 ppts).
Virginia Beach has a higher share of homeowners with VA loans than any other major metro, according to a separate Redfin analysis, with Baltimore also near the top of the list.
Cancellations fell from a year earlier in 11 metros, with the biggest drops in Phoenix (-2.4 ppts), Orlando, FL (-1.4 ppts), Tampa (-1.3 ppts), Sacramento, CA (-1.3 ppts) and Philadelphia (-1.2 ppts).
