High home prices, elevated mortgage rates and economic uncertainty are causing many home purchase agreements to collapse. Increased inventory gives buyers leverage and leads some to walk away after inspections when better options or issues arise. Cancellations are particularly common among buyers using FHA and VA loans, and some first-time buyers back out due to outside advice despite acceptable inspections and agreed prices. San Antonio led metros with 22.7% canceled deals in July; Fort Lauderdale (21.3%), Jacksonville (19.9%), Atlanta (19.7%) and Tampa (19.5%) were also high. Florida concerns include natural disasters, rising insurance premiums and HOA fees. Several metros saw notable year-over-year increases.
Analysts point to high home prices, elevated mortgage rates and economic uncertainty as key reasons why deals are collapsing. With more homes on the market than in recent years, buyers also have greater leverage and sometimes walk away during inspections if they find a better option or encounter issues they don't want to address. Cleveland real estate agent Bonnie Phillips said cancellations are especially common among buyers using Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans.
San Antonio saw the highest share of failed deals in July, with 22.7% of agreements canceled. Fort Lauderdale, Florida (21.3%); Jacksonville (19.9%); Atlanta (19.7%); and Tampa (19.5%) followed. Redfin's analysis covered the 50 most populous metro areas including 44 with sufficient data. Texas and Florida the nation's top states for new-home construction also had some of the highest cancellation rates.
In Florida, concerns about natural disasters, along with rising insurance premiums and homeowners association fees, are pushing some buyers to walk away. At the other end, contracts were least likely to fall through in Nassau County, New York (5.1%); Montgomery County, Pennsylvania (8.2%); Milwaukee (8.3%); New York City (9.5%); and Seattle (10.2%). Virginia Beach, Virginia, recorded the largest annual increase in its cancellation rate, with 16.1% of deals canceled in July, up from 12.5% a year earlier.
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