Over 41,000 Homebuyers Backed Out in January, Highest Cancellation Rate Since 2017
A growing number of U.S. homebuyers are backing out of purchase agreements as shifting market conditions create new uncertainties, according to a new report from Redfin. In January, 14.3% of home-purchase agreements were canceled—equal to roughly 41,000 deals—marking the highest rate for the month since at least 2017.
This represents an increase from 13.4% in January 2024, highlighting the growing hesitancy among buyers amid rising housing inventory, economic instability, and persistent affordability challenges.
Why Are More Buyers Walking Away?
Several factors are fueling the rise in cancellations:
- More Inventory, Less Demand: The number of homes on the market has reached its highest level since 2020, giving buyers more options. At the same time, pending home sales dropped to a historic low (excluding the early pandemic months), leading some house hunters to back out of contracts when they find a better deal elsewhere.
- Economic Uncertainty: Market instability driven by tariffs, layoffs, and federal policy changes is making both buyers and sellers nervous. Some are choosing to delay major financial commitments.
- Affordability Concerns: Mortgage rates remain high, averaging 6.96% in January—an eight-month peak—while home prices climbed 4.1% year-over-year. For some buyers, the cost is simply too steep, leading them to rethink their decisions.
“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 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.”
A Notable Trend in Los Angeles
In Los Angeles, the rate of canceled home sales jumped to 15.9% in January, up from 13.2% a year earlier—the highest January cancellation rate in eight years. Experts attribute this increase in part to the Palisades and Eaton wildfires, which devastated thousands of homes and disrupted Southern California’s housing market.
The share of canceled home purchases is above typical seasonal levels, but it remains lower than previous spikes seen during the pandemic and in late 2022, when mortgage rates first surpassed 7%.
Some real estate agents are advising prospective buyers to monitor properties they previously lost in bidding wars, as contract cancellations present new opportunities.
“It’s worth checking in with the listing agent about a week after the house goes under contract,” said Alison Williams, a Sacramento-based Redfin agent. “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.”
