Homebuyers are increasingly walking away from deals, and July 2025 set a record for cancellations in recent memory. According to new data from Redfin, nearly 58,000 home-purchase agreements across the U.S. fell through last month, representing 15.3% of all homes that went under contract. This marks the highest July cancellation rate since Redfin began tracking data in 2017 and a notable increase from 14.5% in July 2024.
The surge in cancellations reflects a combination of high home prices, rising mortgage rates, and lingering economic uncertainty. These factors have made many prospective buyers hesitant to commit, even after signing contracts. At the same time, a growing inventory of available homes is giving buyers more leverage, allowing them to step back if a better opportunity arises or if an inspection uncovers issues they are unwilling to address.
Why Buyers Are Backing Out
Cleveland Redfin Premier Agent Bonnie Phillips explains that cold feet, exacting standards, and inspection-related problems are the leading causes of cancellations. Buyers using government-backed loans, such as FHA and VA mortgages, appear particularly prone to walking away.
Phillips shared a recent example: “I had an older first-time buyer who got cold feet the week before closing. It was a beautiful house, we secured it at the price she wanted, and there were no inspection issues but neighbors convinced her that owning a home would be too stressful, and she decided to rent instead.”
Regional Hotspots for Deal Cancellations
Some cities saw a much higher share of canceled contracts than others. San Antonio, Texas led the nation, with 730 contracts canceled in July, equal to 22.7% of homes under contract. Florida metros were also prominent on the list:
- Fort Lauderdale, FL: 21.3%
- Jacksonville, FL: 19.9%
- Atlanta, GA: 19.7%
- Tampa, FL: 19.5%
Experts attribute these trends to a combination of high housing supply and affordability concerns. In fast-growing states like Florida and Texas, buyers often feel confident they can find another home if the first deal doesn’t meet expectations. In Florida specifically, rising insurance premiums, high homeowners association (HOA) fees, and the increasing risk of natural disasters are adding to buyers’ hesitancy.
Insurance Costs Adding to the Strain
Insurance premiums continue to climb, further challenging prospective homeowners. Data from Matic shows the average cost of a new home insurance policy rose 9.3% between 2024 and the first half of 2025, reaching $1,966. While the increase is smaller than the sharp spikes seen in previous years, premiums have risen 45% since 2022, while Coverage A rates grew by less than 12%. Homeowners are often paying more for less coverage, which contributes to affordability pressures and may influence decisions to cancel deals.
Where Deals Are Holding Steady
While some metros report high cancellation rates, others have seen relatively few contracts fall through. Areas where home purchases were least likely to collapse include:
- Nassau County, NY: 5.1%
- Montgomery County, PA: 8.2%
- Milwaukee, WI: 8.3%
- New York City, NY: 9.5%
- Seattle, WA: 10.2%
Metros with the Biggest Year-Over-Year Spike
Virginia Beach, VA saw the sharpest year-over-year increase in deal cancellations. Nearly 500 contracts were canceled in July, representing 16.1% of homes under contract a 3.6 percentage point jump from 12.5% in July 2024. Other cities with significant increases included:
- Newark, NJ: +3.3 ppts
- Baltimore, MD: +3.0 ppts
- San Antonio, TX: +2.8 ppts
- Houston, TX: +2.8 ppts
High cancellation rates in Virginia Beach and Baltimore may be influenced by the prevalence of VA loans in these markets, as buyers relying on these mortgages sometimes face stricter financing requirements and additional uncertainties during the process.
Markets Seeing Fewer Cancellations
Conversely, cancellations fell year-over-year in 11 metropolitan areas, with the largest declines recorded in:
- Phoenix, AZ: -2.4 ppts
- Orlando, FL: -1.4 ppts
- Tampa, FL: -1.3 ppts
- Sacramento, CA: -1.3 ppts
- Philadelphia, PA: -1.2 ppts
The Bigger Picture
The rising trend of deal cancellations reflects broader challenges in the housing market. High prices, mortgage rate pressures, and added costs like insurance premiums are making homeownership less accessible for many buyers. At the same time, an increased number of available homes gives buyers more flexibility but also creates volatility for sellers who may face delayed or canceled sales.
As the housing market continues to adjust, experts expect that buyers will remain cautious, with contingencies, inspections, and financing hurdles playing a central role in whether deals close. For sellers, this underscores the importance of transparency, flexibility, and patience in navigating today’s market. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.
