Just in time for Halloween … a new study analyzing the number of homebuyers getting spooked about the commitment of homeownership and ghosting the home seller before they reach the closing table.
Redfin found that slightly more than 53,000 home-purchase agreements were canceled in September nationwide, equal to 15% of the homes that went under contract for the month, and up from 13.6% a year earlier.
Regionally, homebuyers are ghosting sellers at a higher rate in some parts of the country, primarily in Florida and Texas.
For example, Tampa, Florida recorded the highest cancellation rate in September, where slightly more than one-fifth (20.1%) of home-purchase agreements were canceled, up from 17.7% a year earlier.
Immediately following Tampa, Florida was San Antonio, Texas, where 19% of deals were called off, up from 16.8% year-over-year.
Rounding out the top 10 markets where sales fell through were:
- Atlanta, Georgia, where 19.0% of sales were called off in September, up from 16.5% last September
- Orlando, Florida, where 18.7% of sales were called off in September, up from 17.5% last September
- Fort Worth, Texas, where 18.7% of sales were called off in September, up from 16.6% last September
- Riverside, California, where 17.9% of sales were called off in September, up from 17.4% last September
- Fort Lauderdale, Florida, where 17.9% of sales were called off in September, up slightly from 17.8% last September
- Jacksonville, Florida, where 17.8% of sales were called off in September, down from 18.2% last September
- Dallas, Texas, 17.7% of sales were called off in September, up from 16.4% last September
- Las Vegas, Nevada, where 17.7% of sales were called off in September, up from 15.9% last September
“I’m seeing a lot of buyer’s remorse,” said Jo Chavez, a Redfin Premier agent in Kansas City, Missouri. “Buyers make an offer, then they start worrying they could have found a better deal or a better home because there are more home sellers than buyers in the market. Some other buyers are backing out because they’re concerned about job security.”
In a market where home prices and mortgage rates are high and competition is low, buyers want the home they buy to be perfect. Sellers, for their part, want to get the price they have in mind and avoid losing money on the deal. Some sellers who bought during the pandemic may also need to sell their home for a certain price to avoid taking a loss, and are unwilling to negotiate.
Buyers are retreating from the Sun Belt specifically because many metros in that part of the country are less appealing than they once were. The region became a migration hot spot in 2021 and 2022 for its relative affordability and warm weather, with cities like Tampa and Las Vegas leading the charge. But that boom sent prices soaring.
Inspection Period Is The Breaking Point
When neither buyer or seller is willing to compromise, negotiations on home-purchase agreements often break down before closing, typically during the inspection period. Redfin agents said in a recent survey that more than 70% of the deals that fall through do so during the inspection.
It’s a buyer’s market in most of the U.S., so those who are still in the market know they have leverage. It’s common to be choosier and ask for repairs, price reductions and other concessions. When sellers push back, or when inspections reveal new issues, many buyers are walking away. A lot of today’s buyers are also eyeing homes at lower price points, which are more likely to have inspection issues.
It’s worth noting that today’s slow market — along with the uptick in canceled deals — is causing some would-be sellers to hold off on listing their home altogether.
Homebuyers Least Likely Spooked In The Bay Area
Leading the pack of regions where homebuyers are least likely to cancel the sale were San Francisco, California (4%); Nassau County, New York (4.9%); and San Jose, California (6.5%) had the lowest shares of contract cancellations in September, under 7% each. Rounding out the 10 metros where ghosting is least common were:
- Oakland, California, where 8.2% of sales were called off in September, up from 5.0% last September
- Milwaukee, Wisconsin, where 8.9% of sales were called off in September, up from 8.1% last September
- Montgomery County, Pennsylvania, where 9.2% of sales were called off in September, up from 7.5% last September
- Seattle, Washington, where 9.5% of sales were called off in September, up from 8.8% last September
- New York, New York, where 9.6% of sales were called off in September, down from 10% last September
- Boston, Massachusetts, where 10% of sales were called off in September, up from 9.7% last September
- Minneapolis, Minnesota, where 11.1% of sales were called off in September, up from 10% last September
Many of the other cities with low shares of canceled contracts are fairly affordable, and are among the remaining sellers’ and balanced markets in the U.S. Limited inventory in these places makes buyers more willing to move forward once they have made an offer because they lack choices.
Even though deals in these 10 metros close more commonly, many saw sharp increases in cancellations over the past year, led by San Jose (+4.2 percentage points). Nashville (+4), Warren (+3.5), Virginia Beach (+3.4), and Oakland (+3.2) rounded out the top five in terms of biggest increases. Overall, contract cancellations rose in 44 of the 50 most populous U.S. metros.
