US Home-Purchase Agreements Fall Through at an Elevated Rate in January

On Friday, Redfin reported that just over 41,000 US home-purchase agreements fell through in January, equal to 14.3% of the homes that went under contract during the month. That figure is up from 13.4% a year earlier and is the highest cancellation rate for this time of the year since at least 2017.

Redfin identified the metro areas the with largest number of cancellations. Atlanta leads the nation in canceled deals, with one in five (19.8%) of January’s pending home sales canceled. It’s followed by Orlando (18.2%), Las Vegas (17.9%), and Houston and Jacksonville (both 17.8%). This analysis includes the 50 most populous US metros.

Redfin attributes cancellations to the following factors:

• Supply is rising and demand is falling. Housing inventory has risen to its highest level since 2020, giving homebuyers more options. At the same time, pending home sales fell to their lowest level on record (aside from the start of the pandemic) in January.
• Economic uncertainty. Redfin agents report that some deals are falling through because buyers (and sometimes, sellers) are getting cold feet due to widespread economic and political uncertainty.
• Sticker shock. Mortgage rates and home prices remain stubbornly high, with January’s average rate hitting 6.96%, an eight-month high (weekly average rates have since declined to 6.76%), and the median home-sale price rising 4.1%.