A growing number of U.S. home sales are being canceled, with the highest rate of terminations for this time of year on record. According to a recent analysis by Redfin, 14.3% of homes that went under contract in January failed to close, marking an increase from 13.4% a year earlier.
Several metro areas are experiencing particularly high rates of cancellations, notably Atlanta, Las Vegas, Houston, and parts of Florida, where housing supply has been accumulating. Los Angeles has also seen a significant rise in failed transactions, largely attributed to January’s devastating wildfires.
Market Conditions Favor Buyers
The increase in cancellations comes as the housing market shifts in "buyers’ favor," influenced by rising inventory and declining demand. Housing supply has climbed to its highest level since 2020, providing prospective buyers with more choices. Meanwhile, pending home sales in January fell to their lowest level on record outside of the early pandemic months.
Economic uncertainty is also contributing to buyer hesitancy. Reports from Redfin agents indicate that concerns about tariffs, layoffs, and federal policy changes have led some buyers—and even some sellers—to back out of deals. Additionally, affordability remains a challenge; mortgage rates averaged 6.96% in January, an eight-month high, while home prices continued to rise, up 4.1% year over year.
“I’m seeing more homebuyers back out of deals than usual, and I’m hearing the same from other agents and mortgage lenders in the area,” said Sam Brinton, a Redfin Premier agent in Salt Lake City. “Some buyers are getting cold feet with everything going on in the world. But even with more cancellations, there are also more buyers out there in general. The nice homes in desirable locations are selling quickly, and those buyers are less likely to cancel.”
In response to increased cancellations, some Redfin agents are advising buyers to monitor properties they previously bid on. “It’s worth checking in with the listing agent about a week after the house goes under contract,” said Alison Williams, a Redfin Premier agent in Sacramento. “Twice since the start of the year, I’ve found out the original buyer canceled the contract, and my clients were able to get their offers accepted before the home went back on the market.”
Regional Disparities in Cancellations
The highest rates of contract terminations have been observed in the South. Atlanta leads with 19.8% of pending sales falling through, followed by Orlando (18.2%), Las Vegas (17.9%), Houston (17.8%), and Jacksonville (17.8%).
Two of the top five metro areas with the highest cancellation rates are in Florida. The state’s housing market has been cooling, driven by the increasing frequency of natural disasters and soaring home insurance and HOA fees. Rising inventory in Florida has also given buyers more flexibility, leading some to walk away from deals during the inspection period if they find a better option.
In contrast, cancellations remain relatively low in markets with constrained supply. San Francisco has the lowest share of terminated contracts at 4.1%, followed by San Jose (5.9%), Nassau County, NY (6.8%), Oakland (8.4%), and Seattle (8.7%). In these areas, buyers often have fewer alternative options if they choose to back out of a purchase.
Los Angeles Cancellations Surge Amid Wildfires
Los Angeles has experienced the most significant year-over-year increase in cancellations among major metros, with 15.9% of pending sales falling through in January, up from 13.2% a year earlier. The surge is likely linked to the recent Palisades and Eaton wildfires, which destroyed thousands of homes and disrupted the market.
Detroit saw the largest year-over-year jump in cancellations, rising from 13.1% in January 2024 to 17.4% in January 2025.
