- Redfin reports that over 57,000 home-sale agreements were canceled in June, making up 14.9% of pending sales, the highest rate recorded for June since 2017.
- Buyers are exerting more leverage in a buyer's market, with options to back out during inspection periods due to economic uncertainty and better available options.
- Home cancellation rates are highest in Sun Belt metros, with Jacksonville, FL seeing a 21.4% cancellation rate, followed by Las Vegas at 19.7%.
Redfin, a leading real estate brokerage, has released a report indicating a notable trend in the U.S. housing market: a significant increase in the cancellation of pending home sales. In June, more than 57,000 home-sale agreements were canceled nationwide, representing 14.9% of homes that went under contract during the month. This marks the highest cancellation rate for June since records began in 2017, up from 13.9% the previous year.
The current housing market dynamics are heavily characterized by a surplus of sellers compared to buyers, providing the latter with substantial negotiating power. This leverage allows buyers to be more selective, often leading to cancellations during the inspection period. Economic factors such as high home-sale prices, near-record mortgage payments, and anxiety about potential economic downturns are also contributing factors to this trend.
Crystal Zschirnt, a Redfin Premier agent, notes that many buyers are backing out of deals because they anticipate potential drops in home prices or mortgage rates, although such declines are not currently expected by Redfin, which predicts a 1% decrease in home prices and stable mortgage rates of around 6.8% by the end of 2025.
Certain regions are experiencing higher rates of contract cancellations, notably the Sun Belt. Jacksonville, FL, leads with a 21.4% cancellation rate, followed closely by Las Vegas at 19.7% and Atlanta at 19.6%. Contributing to these figures is the prevalence of new construction in these areas, offering buyers ample inventory and choice. Moreover, rising insurance costs tied to frequent natural disasters are nudging some buyers to reconsider their decisions in these regions.
Conversely, Nassau County, NY, recorded the lowest cancellation rate at just 5.4%, underscoring regional disparities in market conditions. Meanwhile, several California metros, including Anaheim and Los Angeles, witnessed significant year-over-year increases in cancellation rates.
Redfin's insights are critical for understanding the shifting landscape of the housing market, emphasizing a broader move toward a buyer-dominant market where economic uncertainties and high costs are influencing buyer behaviors.
