More buyers are walking away from deals than we’ve seen in years. Redfin reported last year that in April 2025, 56,000 home-buyers backed out of their agreements, equaling 14.3% of the total homes currently under contract. Only the cancellations caused by the earliest COVID-19 lockdowns were higher in April than we saw.
High mortgage rates, increased available homes on the market, and signs of a slowing economy are giving potential buyers second thoughts—or causing them to leave the market. In cities such as Orlando and Tampa, one out of every five deals is being canceled.
So, what’s behind this increase in deals that aren’t closing?
Economic Uncertainty
Many buyers are unsure whether to commit to buying because of changing tariffs, layoffs, and new government policies. Few people feel confident spending more since they worry about the economy and job prospects. The uncertainty makes buyers think twice before paying, so the contracts may still be canceled once signed.
Even more, concerns in the global economy, such as recessions or challenges in trade, lead buyers in turbulent areas or industries to hesitate.
Elevated Mortgage Rates
Because of increased mortgage rates, many people are reconsidering whether they can afford a house. The monthly cost of having a house became much higher after rates rose to between 6.7% and nearly 7% in April 2025, compared to the lows seen during the pandemic.
The higher rates have discouraged many first-time buyers since they can’t take out loans with normal debt ratios anymore. People usually realize how much their monthly payments will be when they’re nearing the end of the process, causing them to cancel.
Sticker Shock from High Home Prices
Strong demand has kept housing prices high even as more homes are listed, as the median sale price reached $438,466 last month. Since the home prices increased 1.4% in the previous year, those who bought did not foresee the extra financial responsibility of owning a home.
At the last stage of purchasing, many buyers discover that their total expenses include closing costs, taxes, and insurance. When buyers are on a budget, they might not want to sign up if they don’t think they will be able to pay for long.
Increased Housing Inventory
A larger supply of properties on the market gives purchasers greater choice this year than last. At the end of April 2025, housing stock reached its highest level in five years, giving buyers more power and lessening the rush to close deals.
With so many properties to pick from, buyers can afford to cancel in search of something better. And because they have more power to negotiate, buyers are likely to cancel their contracts if inspections show problems or better chances arise.
Buyer’s Remorse and Cold Feet
Lack of knowledge leads to second-guessing, which is currently evident in the real estate market. Due to ongoing economic turbulence, many buyers experience anxiety or regret when making a home purchase.
People may regret their decision if they feel anxious about high prices or are overly cautious about when to buy. Many first-time buyers find this shift so challenging that they often doubt themselves and feel nervous about becoming homeowners.
Loan Denials
Now that lending standards are tighter and mortgage rates are higher, many buyers are finding it harder to get a mortgage. Loan denials account for a significant portion of canceled transactions, as lenders tighten credit requirements and enforce rigorous debt-to-income ratios.
The debt-to-income ratio was the most common reason for a denied mortgage application, at 40%, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.
Those who were pre-approved early on may discover that their financial situation has changed, and the loan is no longer viable, which can halt the sale. Many people struggle to afford their down payment and the regular monthly mortgage payments in areas where houses are expensive.
Appraisal Issues
Appraisals that are too low are a massive challenge in competitive markets where homes usually sell for more than their value. A lower appraisal leads to either new negotiations or, for the buyer, an out-of-pocket expense. When neither party wants to give in, the deal usually doesn’t work out.
Now that local market values grow more slowly than home prices, more appraisal issues have arisen, causing more conflicts between people who agree to purchase homes.
Home Inspection Problems
Many times, a home inspection reveals things that buyers had not anticipated. Extensive structural damage, using old electric systems, and faulty plumbing can steer buyers away from investing. Even minor problems might stop a sale if they worry buyers too much or cause disagreements about who fixes anything that goes wrong.
Sellers who don’t talk or address issues spotted during inspection may see buyers step away and cancel their purchase.
Title Issues
Both the buyer and the seller should have a clear title; nonetheless, title defects often cause deals to be canceled or renegotiated. When there are liens, boundary arguments, or matters from probate, the process can be delayed or stopped altogether. According to the American Land Title Association (ALTA), title issues are a factor in approximately 11% of delayed or canceled home sales nationwide.
Buyers encountering significant title problems may lose confidence in the transaction’s legitimacy or feasibility, leading to a canceled sale. Handling title issues in advance reduces risk and keeps buyers’ confidence.
Contract Contingencies
Buyers gain safety through contract contingencies but may delay or cancel the deal. The contract may automatically be canceled when buyers or sellers do not meet the agreed-upon deadlines.
Problems and misunderstandings about contingencies can also lead to more cancellations.
Builder Delays
Buyers who purchase new construction homes often become upset and cancel due to builder delays. Supply shortages, labor deficiencies, and permit problems regularly create delays in building, which can undermine buyers’ plans and violate agreements.
If the buying process takes too long, some buyers might choose other properties or reconsider their plans.
Natural Disasters
Regions frequently hit by heavy storms, floods, or wildfires struggle with transactions. In 2022, 66,255 fires burned 7,534,403 acres of land in the United States, according to the National Centers for Environmental Information (NOAA).
Hurricanes also have the power to reduce the value of nearby properties. NOAA estimates that the United States experienced damage from five major hurricanes in 2022 worth over $100 billion. Buyers often cancel contracts if a home sustains damage or concerns about future risks outweigh the property’s appeal. High premiums and possible rebuilding costs can prevent buyers from purchasing in regions at risk of disasters.
Disclaimer – The Finance Key does not provide and does not intend to provide financial, investment, tax, or legal advice. Information contained in this article is for informational and educational purposes only. This list is solely the author’s opinion based on research and publicly available information. The inclusion of links to third-party content is not an endorsement by The Finance Key of such content or services. Please do your due diligence and use your discretion.
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