Home Buyers Backing Out at Fastest Pace in Decades

A Record-Breaking Wave of Deal Cancellations

The real estate industry is facing a troubling trend that has accelerated sharply into 2026: buyers are backing out of signed purchase agreements at the fastest pace in nearly a decade. For real estate agents on both sides of the transaction, this surge in contract cancellations is more than a statistical curiosity. It represents lost commissions, frustrated clients, wasted marketing dollars, and an urgent need to adapt strategies.

According to a January 2026 report from Redfin, more than 40,000 home purchase agreements were canceled in December 2025 alone, representing 16.3% of all homes that went under contract that month. That marks the highest December cancellation rate since Redfin began tracking the metric in 2017.

To put that in perspective, the December 2024 cancellation rate was 14.9%. Just six months earlier, in July 2025, the rate hit 15.3% with roughly 58,000 agreements falling through, also a record for that month. The trajectory is clear and accelerating.

 Key Stat 16.3% of all home purchase agreements were canceled in December 2025, the highest rate on record. That translates to over 40,000 deals that fell apart before reaching the closing table.

Chen Zhao, Head of Economics Research at Redfin, explained the dynamic driving the trend: High housing costs and rising inventory have made homebuyers more selective. Home sellers outnumber buyers by a record margin, meaning the buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home.

This article is designed as a comprehensive resource for real estate professionals who want to understand why deals are falling apart, which markets are most affected, and most importantly, what specific strategies agents can deploy to keep transactions together and close more deals in 2026.

2. The Hard Numbers: Cancellation Rates by City and Region

The cancellation crisis is not evenly distributed across the country. Certain metro areas, particularly in the Sun Belt, are experiencing dramatically higher fallout rates, while coastal markets with constrained inventory remain relatively stable. Understanding the geographic breakdown is essential for agents working in affected markets.

Top 10 Metro Areas With the Highest Cancellation Rates (December 2025)
RankMetro AreaCancellation RatePrior MonthYear-Over-Year1Atlanta, GA22.5.6%+4.1 pts2Jacksonville, FL20.6.2%+3.8 pts3San Antonio, TX20.6.9%+4.2 pts4Cleveland, OH20.2.8%+3.5 pts5Tampa, FL19.4.1%+3.0 pts6Fort Lauderdale, FL~19.0%~17.5%+2.8 pts7Orlando, FL~18.5%~16.0%+3.2 pts8Houston, TX~18.0%~15.5%+2.9 pts9Phoenix, AZ~17.5%~15.0%+3.0 pts10Dallas, TX~17.0%~14.8%+2.8 pts

Source: Redfin MLS pending sales data, January 2026. Approximate figures (~) based on regional trend data.

Metro Areas With the Lowest Cancellation Rates (December 2025)
RankMetro AreaCancellation RateKey Factor1Nassau County, NY3.8%Tight inventory, high demand2San Francisco, CA4.2%Limited supply, motivated buyers3San Jose, CA8.9%Tech-driven demand, low stock4New York City, NY~9.5%Competitive market, co-op structure5Los Angeles, CA~10.0%Constrained inventory
Metro Areas Where Cancellations Declined Most

Notably, not every market saw an increase. Several metro areas posted meaningful declines in cancellation rates, suggesting that local conditions can dramatically shift outcomes:

- Detroit, MI: -8.0 percentage points (largest decline nationally)
- Warren, MI: -2.8 percentage points
- Pittsburgh, PA: -2.3 percentage points
- Los Angeles, CA: -1.1 percentage points
- Nassau County, NY: -0.7 percentage points

The pattern is unmistakable: markets with excess inventory, new construction gluts, and rising non-mortgage costs (insurance, HOA fees, property taxes) are seeing far more cancellations than supply-constrained coastal markets where buyers have fewer alternatives and face intense competition.

3. The 8 Core Reasons Buyers Are Backing Out

Understanding the root causes of cancellations is the first step toward preventing them. Based on current industry research, expert commentary, and agent interviews, the following eight factors are driving the 2026 cancellation surge:

Reason #1: Sticker Shock and Affordability Anxiety

The single biggest driver of cancellations is the gap between what buyers think they can afford and what homeownership actually costs once they see the full picture. Monthly mortgage payments, property taxes, homeowner's insurance, HOA fees, maintenance reserves, and potential special assessments add up to far more than the number buyers initially calculate based on the purchase price alone.

According to Bankrate, buyers in 2026 need an income of nearly $117,000 to afford the typical U.S. home. Many buyers don't fully internalize total monthly costs until after they're under contract and see itemized closing disclosures. That's when panic sets in.

Reason #2: Inspection Findings (Real and Strategic)

Home inspections remain the most commonly cited reason for backing out of a deal. Redfin noted that it's not uncommon for buyers to back out following an inspection using the inspection contingency, even if they have an altogether different reason for canceling. The inspection serves as a convenient, no-penalty exit ramp for buyers who have developed doubts for any number of reasons.

Common inspection findings that trigger cancellations include foundation cracks, outdated electrical systems, roof damage, mold, radon, plumbing failures, HVAC problems, and pest infestations. In Florida, the Surfside condo collapse aftermath has made structural inspections even more scrutinized.

Reason #3: Rising Insurance and HOA Costs

This is an increasingly significant factor, particularly in Florida and Gulf Coast markets. Florida homeowner's insurance costs have skyrocketed, with the average annual premium reaching approximately $15,460 by the end of 2025 according to Insurify. HOA fees in Florida metros have surged as well:

Florida MetroMedian HOA FeeYoY IncreaseCondo AverageTampa$614/month+17.2%$700+Orlando$550/month+16.7%$650+Fort Lauderdale$500/month+16.2%$646+West Palm Beach$475/month+12.8%$719+Miami$460/month+8.5%$600+Jacksonville$380/month+5.7%$450+Naples$650/month+10.0%$1,000+

Source: Redfin HOA analysis (July 2024 data), Florida Realty Marketplace (2025-2026 estimates).

When buyers discover after going under contract that their true monthly cost including insurance, taxes, and HOA is hundreds or even thousands of dollars more than they anticipated, many choose to walk away rather than commit to payments they can't comfortably sustain.

Reason #4: Financing Failures and Lending Tightening

With mortgage rates hovering above 6% throughout 2025 and into 2026, final loan approvals are more fragile than many agents realize. A pre-qualification letter is not a guarantee of financing. Buyers with marginal credit scores, high debt-to-income ratios, or recent employment changes are particularly vulnerable to last-minute loan denials.

Cancellations are also more common among buyers using FHA and VA loans, according to Redfin Premier agent Bonnie Phillips in Cleveland. These loan types come with stricter appraisal requirements and property condition standards that can derail deals even when buyer intent is strong.

Reason #5: Economic Uncertainty and Job Security Fears

A prevailing sense of economic unease is causing what one Virginia-based broker described as "economic nausea." Buyers feel queasy about committing to the largest financial obligation of their lives amid uncertainty about tariffs, inflation, AI-driven job displacement, and overall economic direction.

An Ipsos survey conducted on behalf of Redfin found that 44% of American workers said job security concerns were keeping them from making a major purchase like a home. Among those concerned about job security, 32% cited their company's performance, 17% cited tariffs, and 16% cited the impact of AI on their jobs.

Reason #6: More Inventory Means More Buyer Leverage

The dynamics of the market have shifted dramatically. In December 2025, there were roughly 47% more home sellers than buyers in the market, or approximately 631,535 more sellers than buyers, according to Redfin. This is the largest gap in records dating back to 2013.

When buyers know they have options, they become more selective. They're less afraid to walk away from a deal because they know another comparable property is likely available. This is the opposite of the pandemic-era environment when buyers waived inspections and competed with dozens of offers.

Reason #7: Appraisal Gaps

In markets where price growth has slowed or stalled, appraisals are coming in below contract price more frequently. When a home appraises for less than the agreed purchase price, the buyer's lender won't finance the full amount. This creates a gap that one or both parties must bridge. If neither is willing to negotiate, the deal falls through.

Reason #8: Pure Cold Feet and Buyer's Remorse

Sometimes the reason is as simple as cold feet. Buying a home is the largest financial decision most people will ever make, and the weight of that commitment can become overwhelming after the initial excitement fades. First-time buyers are especially susceptible. Agent Bonnie Phillips noted that sometimes buyers just need to cancel to get some fresh air and breathe.

4. Which Markets Are Hit the Hardest (and Why)

The geographic pattern of cancellations reveals a clear story about market dynamics in 2026. The hardest-hit markets share a specific set of characteristics:

- High levels of new construction creating inventory surpluses
- Significant in-migration during the pandemic era that has since cooled
- Rising non-mortgage costs (insurance, HOA, property taxes)
- More sellers than buyers, shifting negotiating power
The Florida Factor

Florida dominates the list of high-cancellation markets, with Jacksonville, Tampa, Fort Lauderdale, and Orlando all posting rates well above the national average. The reasons are intertwined:

- Homeowner's insurance averaging $15,460 annually, roughly triple the national average
- HOA fees surging 10-17% year-over-year across major metros
- Post-Surfside condo safety legislation requiring expensive inspections and reserve funding
- New construction oversupply, particularly in the Tampa Bay and Orlando corridors
- Buyers from out of state who discover true ownership costs only after going under contract
The Sun Belt Correction

Texas markets including San Antonio, Houston, and Dallas are experiencing similar dynamics. The pandemic-era building boom produced significant new inventory, and demand has cooled as remote work flexibility has normalized and mortgage rates have remained elevated. Buyers in these markets have more leverage than at any point since before 2020.

Markets That Are Relatively Immune

On the other end of the spectrum, supply-constrained Northeast and West Coast markets are seeing minimal cancellations. Nassau County (3.8%), San Francisco (4.2%), and San Jose (8.9%) remain seller-friendly because inventory is extremely limited and buyers cannot afford to lose a property by walking away. In these markets, buyers are still competing, not contemplating exit strategies.

5. The True Cost of a Canceled Deal

For real estate agents, a canceled deal isn't just an emotional setback. It carries real, measurable financial consequences for everyone involved:

Cost to the Agent
Cost CategoryEstimated ImpactLost commission income$6,000-$18,000+ per transaction (avg home $360K)Time invested (showing, negotiating, paperwork)40-80+ hours per transactionMarketing and advertising spend$200-$2,000+ (staging, photography, ads)Transaction coordination costs$300-$800 (TC fees, admin)Opportunity cost (other deals not pursued)Impossible to quantify, often significantReputation damage if pattern continuesReferral pipeline shrinks over timeEmotional toll and motivation impactBurnout risk increases with each lost deal
Cost to the Seller
- Missed market timing (especially if prices are declining in their area)
- Extended days on market, which stigmatizes the listing
- Continued mortgage payments, insurance, taxes, and HOA during relisting
- Potential need to disclose failed deal and inspection findings to future buyers
- Emotional whiplash from celebrating a contract to facing uncertainty again
Cost to the Buyer
- Inspection fees ($300-$600+), appraisal fees ($400-$700), and other due diligence costs are non-refundable
- Potential loss of earnest money if cancellation occurs outside contingency windows
- Credit inquiry impact from mortgage application
- Time and emotional investment lost
- Risk of losing favorable rate lock if the process restarts

6. The Inspection Contingency Trap

The inspection contingency is simultaneously one of the most important buyer protections and one of the most abused exit mechanisms in real estate transactions. Understanding how it functions in 2026's market is critical for agents on both sides.

How the Inspection Contingency Works

A standard inspection contingency gives buyers a window, typically 7 to 17 days depending on state law, to have the property professionally inspected and decide whether to proceed. If the inspection reveals problems the buyer considers unacceptable, they can negotiate repairs, request credits, renegotiate the price, or walk away with their earnest money deposit intact.

The Strategic Exit Problem

Here's what many agents don't fully appreciate: buyers frequently use the inspection contingency as their exit ramp even when the inspection has nothing to do with their real reason for canceling. A buyer who is experiencing sticker shock, cold feet, or has found another property they prefer will often use a minor inspection finding as their formal justification for backing out. This is entirely legal in most states, particularly those with subjective contingency language that lets the buyer decide whether findings are acceptable.

 Agent Strategy Insight The inspection contingency is where most deals die. Agents who proactively manage expectations before, during, and immediately after the inspection dramatically reduce cancellation rates. Don't wait for the report to arrive and hope for the best.
Inspection Waiver Trends

During the pandemic's peak seller's market, buyers were waiving inspection contingencies at alarming rates to compete. NAR data shows waiver rates peaked at 30% in June 2022 before declining to approximately 18-21% by late 2025. Massachusetts passed legislation in 2024 prohibiting sellers from conditioning offer acceptance on an inspection waiver. New York is considering similar legislation for its 2025-2026 legislative session.

As the market has shifted toward buyers, inspection waivers have become less common, and buyers are once again exercising their contingency rights aggressively, sometimes strategically.

7. How Rising Insurance, Taxes, and HOA Fees Are Killing Deals

Non-mortgage ownership costs have become the silent deal killer of 2026. While buyers typically focus on the purchase price and mortgage rate, it's the total cost of ownership that ultimately determines whether they can sustain the payment. And these costs have been rising faster than home prices or wages in many markets.

The Total Cost of Ownership Crisis
Ownership CostNational AvgFlorida AvgTrendHomeowner's Insurance$2,500/year$15,460/yearRising sharplyProperty Taxes~1.0% of value0.8-1.1% of valueSteady to risingHOA Fees (condo)$250-$400/mo$500-$1,000/moSurgingHOA Fees (single-family)$150-$250/mo$200-$500/moRisingFlood InsuranceVaries$500-$2,000+/yrRequired in zonesSpecial AssessmentsUnpredictableIncreasingly commonGrowing riskMaintenance Reserve1-2% of value/yr1-3% of value/yrOften overlooked

The impact on deals is direct: a buyer who qualifies for a $350,000 mortgage may discover that the total monthly payment including insurance, taxes, HOA, and maintenance is $800-$1,500 more per month than they expected. That gap between expectation and reality is where cancellations are born.

Cotality (formerly CoreLogic) reported that states with the fastest-rising property taxes and insurance costs are seeing spikes in mortgage delinquencies, concentrated in the South and Midwest. This data point is becoming well-known among savvy buyers, adding another layer of hesitation before committing.

8. The Psychology of Buyer Cold Feet in 2026

Real estate transactions are as much emotional as they are financial. Understanding the psychological triggers that drive buyers to cancel is essential for agents who want to prevent fallout.

The 5 Psychological Stages of Buyer Withdrawal
- Excitement (Offer Accepted): Euphoria, planning, emotional investment in the home.
- Reality Check (Disclosure Review): Total costs become clear, comparison shopping begins.
- Doubt (Inspection Period): Minor issues amplify existing anxiety, "what-if" thinking takes over.
- Rationalization (Seeking Justification): Buyer looks for a legitimate reason to back out, often finding one in the inspection report.
- Exit (Cancellation): Buyer exercises contingency and walks away, often with a mixture of relief and regret.

The most effective agents intervene at Stage 2 and 3, before the buyer enters rationalization mode. By the time a buyer is actively looking for reasons to cancel, the deal is already in critical condition. Proactive communication, education, and expectation management are the best preventive tools.

First-time buyers are especially vulnerable to this progression because they lack the frame of reference that experienced homeowners have. They don't know that every home inspection finds something, or that true total ownership costs always exceed the mortgage payment alone.

9. 15 Proven Strategies Agents Can Use to Prevent Cancellations

This is the most critical section of this article. While market conditions are beyond your control, the following 15 strategies will dramatically reduce your cancellation rate and help you close more deals in 2026's challenging environment.

Strategy #1: Conduct a Comprehensive Buyer Consultation Before Any Showings

Before showing a single property, sit down with your buyer and have a detailed conversation about total cost of ownership. Walk them through a sample budget that includes mortgage principal and interest, property taxes, homeowner's insurance (with real local quotes), HOA fees, maintenance reserves, and utilities. Use a real-world property example from their target market to make the numbers concrete.

Why it works: Buyers who understand true costs upfront are far less likely to experience sticker shock after going under contract. This eliminates the single largest driver of cancellations.

Strategy #2: Require Full Pre-Approval, Not Just Pre-Qualification

A pre-qualification letter means almost nothing.

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