Surge in Home Purchase Cancellations Signals Buyer Market Shift

In December 2025, U.S. homebuyers canceled approximately 40,000 purchase agreements, representing 16.3% of all homes that went under contract. This figure marks the highest cancellation rate for any December since Redfin began tracking this data in 2017, up from 14.9% in December 2024. The increase in cancellations is attributed to high housing costs and a growing inventory of homes, which has led buyers to be more selective in their purchasing decisions.

Homebuyers Are Canceling Deals at the Highest Rate on RecordHomebuyers canceled deals at their highest rate ever in DecemberHomebuyers are backing out of deals at the fastest pace in nearly a decade

Chen Zhao, head of economics research at Redfin, noted that the current market conditions favor buyers, as sellers outnumber them by a significant margin. This imbalance allows buyers to explore multiple options and withdraw from deals if they perceive better opportunities. The average 30-year fixed-rate mortgage rate, while recently dropping to 6.09%, remains a factor in buyer hesitance, as many still find mortgage payments burdensome.

Homebuyers are backing out of deals at the fastest pace in nearly a decade

The highest rates of contract cancellations were observed in Atlanta, Georgia, where 22.5% of pending home sales fell through, an increase from 19.6% in November. Other major metropolitan areas with significant cancellation rates included Jacksonville, Florida, and San Antonio, Texas, both at 20.6%, and Cleveland, Ohio, at 20.2%. In contrast, areas like Nassau County, New York (3.8%), San Francisco, California (4.2%), and San Jose, California (8.9%) reported the lowest cancellation rates.

Homebuyers Are Canceling Deals at the Highest Rate on Record

San Jose experienced the most substantial year-over-year increase in cancellations, rising by 6.8 percentage points, despite its overall low cancellation rate. Conversely, cities like Detroit, Michigan, and Warren, Michigan, saw the most significant declines in cancellations, with decreases of 8 and 2.8 percentage points, respectively.

Homebuyers canceled deals at their highest rate ever in December

Redfin's analysis indicates that the current buyer's market is characterized by a significant number of sellers, leading to increased buyer leverage. "High housing costs and rising inventory have made homebuyers more selective," Zhao stated. This sentiment is echoed by real estate professionals who emphasize that buyers are willing to negotiate and may withdraw from contracts if they encounter maintenance issues or perceive a home to be overpriced.

Homebuyers are backing out of deals at the fastest pace in nearly a decade

Some industry experts express concern that the high cancellation rates may reflect broader economic uncertainties and a potential slowdown in the housing market. Critics argue that while buyers may have more options, the volatility in mortgage rates and housing prices could deter long-term investment in real estate.

Homebuyers Are Canceling Deals at the Highest Rate on Record

As the housing market continues to evolve, analysts predict that affordability may improve in 2026, with wages potentially rising faster than housing costs. This shift could influence buyer behavior and impact future cancellation rates as the market stabilizes.

Homebuyers Are Canceling Deals at the Highest Rate on Record