Homebuyers canceled contracts at a record pace in July

High mortgage rates, escalating prices may be contributing factors

By Mark Huffman of ConsumerAffairs

August 25, 2025

• Roughly 58,000 U.S. home-purchase agreements were canceled in July – 15.3% of all contracts signed that month, the highest July rate since 2017.

• Cancellations are driven by high costs, economic uncertainty, and greater buyer leverage in a market with more options.

• Texas and Florida metros saw the highest fallout rates, while New York and Pennsylvania had some of the lowest.

Last week, the National Association of Realtors reported that home sales rose a surprising 2% in July. But another real estate industry report tells a different story. In July, an estimated 58,000 home-purchase agreements fell through, according to a new analysis from real estate brokerage Redfin.

That represents 15.3% of all homes that went under contract last month, up from 14.5% a year earlier and the highest July cancellation rate since Redfin began tracking the data in 2017.

The analysis, based on MLS pending-sales data, underscores how affordability pressures and shifting buyer psychology continue to weigh on the housing market.

Why deals are going south

High mortgage rates, elevated home prices, and general economic uncertainty are leaving many buyers hesitant to commit. With more inventory available compared to past years, buyers also wield greater leverage in negotiationsand some are walking away during inspection periods if better homes surface or if costly repairs are revealed.

Cold feet, high standards, and inspection issues are the most common reasons deals collapse, said Bonnie Phillips, a Redfin Premier agent in Cleveland.

She also said cancellations are especially common among buyers using FHA and VA loans. In one case, Phillips said a first-time buyer pulled out a week before closing, not due to the property itself, but after neighbors convinced her renting would be easier than owning.

Regional hotspots

Texas and Florida led the nation in failed deals. San Antonio posted the highest cancellation rate among large metros, with 22.7% of contracts terminated in July. Fort Lauderdale (21.3%), Jacksonville (19.9%), Atlanta (19.7%), and Tampa (19.5%) rounded out the top five.

The trend is partly tied to robust homebuilding in Texas and Florida, which gives buyers confidence they can find alternatives. In Florida, some buyers are also backing out amid concerns over rising insurance costs, steep homeowners association fees, and worsening natural disaster risks.

By contrast, Nassau County, N.Y., had the lowest cancellation rate at just 5.1%, followed by Montgomery County, Pa. (8.2%), Milwaukee (8.3%), New York City (9.5%), and Seattle (10.2%).

Virginia Beach, Va., recorded the sharpest year-over-year increase, with cancellations jumping from 12.5% to 16.1%, a 3.6 percentage point rise. Newark, N.J., Baltimore, San Antonio, and Houston also saw significant upticks. Virginia Beach and Baltimore have among the nations highest shares of VA loan holders, making their markets more vulnerable to loan-related fallout.

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