Home-purchase cancellations rose to a record high in July 2025, with about 58,000 contracts falling through as buyers faced rising mortgage rates, high prices and lingering uncertainty, according to a Redfin study. That number represented 15.3 percent of pending sales, the highest July rate since Redfin began tracking data in 2017. Buyers in many markets exercised contingencies or walked away when they found better deals or uncovered issues during inspections.
Rising Costs Drive Buyer Hesitation
The jump in home-purchase cancellations reflects a market where affordability challenges have shifted power to buyers. Mortgage rates in July hovered near 6.7 percent, compared with roughly 3 percent in early 2021. High asking prices added to buyers’ caution. “When buyers see the full cost of monthly payments plus insurance, cold feet set in,” said a Redfin analyst in the report. The report found that buyers in high-growth metros led the trend: San Antonio saw 22.7 percent of pending sales cancelled, while Fort Lauderdale and Jacksonville posted cancellation rates of 21.3 percent and 19.9 percent, respectively(Redfin).
Markets in the Northeast and Pacific Northwest proved more stable. New York and Seattle recorded cancellation rates well below the national average. Experts say these regions face tighter inventories, which forces buyers to commit or risk missing out on scarce listings.
California Markets See Higher Rates
Several major California metros saw cancellation rates climb year over year. In Los Angeles, cancellations rose to 16.5 percent of contracts, up from 14.8 percent in July 2024. Riverside led the state with a 19.5 percent cancellation rate, and San Diego reached 16.1 percent. In contrast, Sacramento bucked the trend, with cancellations falling to 14.3 percent, down from 15.2 percent a year earlier(Redfin).
Local real estate agents report that buyers are using contingencies more aggressively. Many pause their purchase amid concerns about future rate cuts and economic shifts. Lenders have tightened underwriting, requiring larger down payments and higher credit scores. That extra scrutiny has led some buyers to abandon deals rather than scramble for additional funds.
A Buyer’s Market Dynamic
The surge in home-purchase cancellations underscores a broader shift to a buyer’s market dynamic. Elevated costs and economic uncertainty have cooled demand. Builders, in turn, may adjust prices or offer incentives to close deals. The NAHB Housing Market Index fell near decade lows in August, signaling softer builder sentiment amid affordability pressures.
Some analysts view rising cancellations as a positive sign for long-term market health. When buyers walk away from deals they can’t afford, it may prevent future distress sales and foreclosures. Over time, a market that rewards caution could stabilize prices and improve affordability for qualified buyers.
