Fourteen percent of U.S. home-purchase agreements that went under contract in July fell through, the highest share in nearly three years, as buyers gained enough leverage to walk away from deals they once would have fought to keep, according to a Redfin analysis published Friday.
The seasonally adjusted cancellation rate rose from 13.7% in June and marked the highest reading since November 2023. Redfin based the figures on seasonally adjusted MLS pending-sales data; the brokerage notes homes that fell out of contract in a given month did not necessarily go under contract that same month, and the data is subject to revision.
The shift is real but incremental. Redfin said the share of deals falling through has moved within a narrow band — roughly 13% to 14% — for the past four years. What stands out is the comparison with the 2020-2022 seller’s market, when cancellations ran meaningfully lower.
Why deals are falling apart
Redfin attributes the increase to a decisive shift in negotiating power. The number of U.S. homebuyers dropped to a record low in July, and there were a near-record 51% more sellers than buyers in the market. That imbalance gives house hunters more options and makes them likelier to walk if an inspection turns up problems, an appraisal comes in low, or a seller refuses concessions.
Affordability pressure compounds the effect. With prices high and mortgage rates elevated, many buyers have little financial cushion — enough that an unexpected repair or a change in financing costs can derail a purchase, particularly when a buyer is confident another listing will come along.
“Sometimes buyers get cold feet before the inspection—they revisit the numbers with their lender, get anxious about the payment and never even send the deposit,” said Juan Castro, a Redfin Premier agent in Orlando, in the report. “Other times, they’ll find something relatively minor in the inspection and use it as leverage to ask for major concessions or walk away entirely. Buyers know they have options right now, so they’re pushing harder in negotiations.”
The South leads, coastal seller’s markets lag
Cancellations cluster where buyers hold the upper hand. Atlanta posted the highest rate among the 50 most populous U.S. metros with sufficient data, at 19.8% in July. Houston followed at 19.6%, then San Antonio (18.7%), Las Vegas (18.6%) and Orlando, Fla. (18.2%).
Those markets are among the most buyer-friendly in the country — in Houston, Redfin counted 130% more sellers than buyers. Many were pandemic boomtowns where low rates and remote work drew migration; higher costs, a glut of newly built homes and the rising frequency of natural disasters have since left inventory sitting.
The opposite pattern holds in supply-constrained markets. Nassau County, N.Y., had the lowest cancellation rate at 3.5%, followed by San Francisco (4.1%) and San Jose, Calif. (6.5%). Montgomery County, Pa. (7.3%) and Milwaukee (7.7%) rounded out the bottom five. Redfin noted that Nassau County, Montgomery County and Milwaukee are three of just six seller’s markets left in the U.S., where limited choice gives buyers more reason to hold a deal together. San Francisco’s market has firmed largely on AI-sector salaries and bonuses, according to the report.
Month over month, Houston saw the sharpest increase, jumping to 19.6% from 14.4% in June. Nashville, Tenn., rose to 14.3% from 12.6%, followed by Atlanta, San Francisco and San Jose. Indianapolis recorded the largest decline, falling to 13.9% from 14.9%.
What it means
For sellers, the data reinforces that a signed contract is a weaker guarantee than it was three years ago, and that pricing and pre-listing preparation carry more weight. Redfin suggests sellers consider completing an inspection before listing so problems surface early rather than mid-deal — advice that is the brokerage’s, not a market forecast.
For buyers, a canceled deal creates an opening: a relisted home may draw less competition, and a seller who has already lost one contract may negotiate more readily the second time.
The findings track with other recent signals of a market where demand has thinned. Redfin has separately reported that the U.S. homebuyer count hit a record low even as new listings ticked up, and pending home sales sank to a five-month low as mortgage rates approached their yearly high. Taken together, the numbers describe a market with ample supply and buyers who feel little urgency to close.
