Day: September 3, 2025

Flash back to the real estate market of just four years ago: homebuyers elbowing their way through crowded open houses, waiving inspections, and bidding up prices in search of the elusive “winning offer.” That sense of urgency is long gone. In fact, the formula has flipped. Instead of sprinting through the process, buyers these days are taking their time and haggling over prices. They’re also doing something that would have seemed unthinkable in 2021 — backing out of deals just before the finish line.

Call it the year of cold feet. More than 15% of home purchase agreements fell through in July, the highest percentage for that particular month since the real estate firm Redfin began tracking cancellations in 2017. The uptick — an increase from lows of 11.6% in 2020 and 2021 — reveals the market’s messy state. Buyers are skittish about the rising costs of homeownership and nervous about their jobs. Mortgage rates aren’t doing them any favors, with the typical rate more than twice the record low seen during those early days of the pandemic. With more homes available for sale and fewer buyers to compete with, shoppers who remain on the hunt can afford to be picky. Even after finally submitting that winning offer, they may wonder whether a better bargain could be found elsewhere.

“We have lots of homes available,” says Rhonda Forte, a real estate broker in Fort Worth, Texas. “If they don’t like this one, they can go to the next.”

Buyers’ uneasy leverage won’t last forever — in fact, there are early signs that the pendulum may be swinging back in favor of sellers. But until borrowing gets cheaper and people feel better about the economy, expect presale jitters to remain.

Home purchases can break down for a lot of reasons. An inspection may reveal a sagging roof, moldy attic, or flooding-prone basement. The buyer’s loan could fall through, or they may not have the cash to cover an appraisal gap. Many buyers also count on selling their existing home before closing on a new one. If they have trouble offloading their old property, they may not be able to move ahead with the new place.

And then there’s plain old buyer’s remorse. Even after an offer is accepted and the two parties sign on the dotted line, there’s a lot of work that needs to happen behind the scenes: an inspection, appraisal, mortgage underwriting, title search. Buyers can pull out at any time during this interlude, though they may forfeit their deposit, which is often a few thousand dollars. Cancellations typically spike in the fall or winter, when the real estate market slows down and buyers feel less urgency. That’s why this summer uptick stands out. In a nationwide survey of real estate agents by John Burns Research and Consulting in June, agents cited “cold feet” as the second-most common reason for purchase cancellations, right behind inspection issues. In July, 37% of agents surveyed by John Burns reported seeing more cancellations than expected at that time of year.

We have lots of homes available. If they don’t like this one, they can go to the next.Rhonda Forte, real estate broker in Fort Worth, Texas

The “cold feet” phenomenon is a function of time and options. The more time that a buyer has to mull the deal, and the greater their number of choices elsewhere, the more comfortable they are in walking away. So it’s no surprise that Redfin data shows breakups were most common in places like Texas and Florida, which have seen a surge of available homes for sale thanks to busy homebuilders and a relative lack of buyers. Inventory nationwide has steadily climbed since mortgage rates jumped in 2022 — there were almost 25% more active listings in July than at the same point a year ago, data from Realtor.com shows. When more homes sit on the market, serious buyers can take their time and scrutinize properties.

“Buyers have been getting a little bit of a break in the sense that there’s more inventory,” Chen Zhao, the head of economics research at Redfin, tells me. “They can afford to be a little choosier.”

The other major factor weighing on the minds of homebuyers is affordability. They may be wary of shouldering the rising costs of ownership, like insurance, upkeep, and property taxes. If they get a mortgage with the prevailing rate of roughly 6.6%, they’ll most likely be paying hundreds of dollars more in interest every month than neighbors who snagged a sub-3% loan early in the pandemic. Home prices have fallen from their peak in some regions, but generally remain above pre-pandemic levels. To offset these costs, agents tell me, buyers are taking advantage of the slower market by starting with an offer below the asking price and requesting concessions, like payments for repairs or help on closing costs.

“They want to lowball everything,” says Danny Herndon, a real estate agent in the San Antonio area. The metro had the highest rate of cancellations in July, per Redfin’s data, with almost 23% of home-purchase agreements falling through. Fort Lauderdale (21.3%), Jacksonville (19.9%), and Atlanta (19.7%) followed close behind.

One thing those cities have in common: lots of shiny new homes. Not only does construction add more properties to the competition, but builders are more likely to offer steep incentives, like mortgage rate “buydowns,” to get homes off their books. To compete with those kinds of deals, regular sellers may have to aggressively cut their prices or toss in deal sweeteners of their own.

“Builders have had a huge upper hand,” says Cara Lavender, a senior research manager at John Burns. Regular sellers usually can’t afford to pay for all the incentives that come with a new home these days (or simply don’t want to). But even builders, who are typically loath to cut prices, now say in surveys that their prices are down 2% year over year. “We’re projecting that to continue through the year,” Lavender tells me. When the market for new homes slows down, that puts a drag on existing homes, too. “Resale prices are going to have to continue to come down,” she says. For sellers, the recent surge in cancellations adds insult to injury. Agents tell them to “get real” about the market and set their expectations accordingly. But even after ceding ground on the price or closing costs, they still risk losing a buyer to greener pastures.

The defining feature of the housing market back in 2021 was a nagging fear of missing out. Caught up in what seemed like a once-in-a-lifetime bull run, FOMO-filled buyers opted to secure a home by any means necessary — even if it meant stretching their budget or whittling down their list of must-haves. The current malaise strikes me as a different kind of FOMO. Buyers don’t want to inadvertently pass over a more favorable deal elsewhere, so they’re more likely to bail on the sure thing in front of them. Even falling prices, which probably sound like a godsend for buyers, may actually deter people from taking the leap.

“No one wants to be the one to kind of stick their hand out and say, ‘OK, I’m going to make a purchase,'” Lavender tells me. “‘What if prices keep falling? What if I wait a little bit longer and there is a better deal?'”

Real estate is local, of course. In the Midwest and Northeast, where builders have completed fewer homes, competition is generally much stiffer than it is in the lower half of the US, otherwise known as the Sun Belt. “Those two regions still do not have enough supply to meet their demand,” Lavender tells me.

No one wants to be the one to kind of stick their hand out and say, ‘OK, I’m going to make a purchase.’ What if prices keep falling?Cara Lavender, senior research manager at John Burns Research and Consulting

Analysts at John Burns expect the sluggish market to continue through the rest of this year and 2026. Even if borrowing rates do come down a little bit, what really needs to stabilize is the “consumer psyche,” Lavender tells me. As long as “uncertainty” is the word on everyone’s lips, buyers will probably keep backing out of deals. Other real estate gurus see it a little differently. Buyers may already be at their negotiating-power peak for this cycle, Redfin’s Zhao says. The pool of available homes shrank month over month in June and July — the first time inventory has gone down since July 2023. Would-be sellers are realizing the conditions aren’t so favorable for them, so they’re either yanking their homes off the market or not even listing in the first place. The latest data from Realtor.com shows that for every 100 new listings in June, 21 were pulled without a sale, a 48% increase from the previous year.

“What I’m seeing a lot of is sellers taking their house off the market because they still think it’s 2021,” Herndon tells me. “They’re not willing to drop the price, and buyers aren’t willing to pay them what they were paying during the pandemic.”

Data from Freddie Mac also shows that the typical mortgage rate has been slowly drifting lower after months of hovering near 7%. If home loans get cheaper, more buyers may enter the market, competition could heat up, and there may be more pressure to stick with a deal once it’s signed. That’s all still a big “if.” Predicting mortgage rates is tough — nobody knows for sure where things are headed. But it’s clear that the rise in cancellations is yet another symptom of what one economist last year described to me as a “savagely unhealthy” housing market. Perhaps a shift — and a thawing of buyers’ cold feet — would be welcomed by everyone.

“It seems like we’re heading toward a change, and mortgage rates are starting to reflect that,” Zhao tells me. “Maybe we’re on the cusp of something different now.”

James Rodriguez is a senior reporter on Business Insider’s Discourse team.