Contract Cancellations Just Hit the Highest Level on Record
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More than 40,000 home-purchase agreements fell apart in December, the highest cancellation rate Redfin has ever recorded for that month.
That’s not a typo.
According to a new Redfin analysis of MLS pending-sales data, 16.3% of all homes that went under contract in December ended up canceled. That’s up from 14.9% a year earlier and marks the highest December share since Redfin began tracking the data in 2017.
This lines up with what’s happening across the market as buyers gain more options and become increasingly selective.
A Record Share of Pending Sales Are Falling Through
Redfin’s historical data shows December cancellations have been climbing for years, and 2025 pushed them to a new high.
Here’s how the trend looks in context:
December 2025 posted a 16.3% cancellation rate, the highest December level on record
December 2024 came in at 14.9%, meaning cancellations jumped 1.4 percentage points year over year
Prior Decembers generally ranged between roughly 10% and 15% before reaching today’s peak
Redfin points out that a home canceled in December may have gone under contract in a previous month. What matters is the growing number of deals falling apart before closing.
Rising inventory is playing a major role here. With more homes available and fewer bidding wars, buyers aren’t feeling rushed to make a deal work at any cost.
Buyers Have Options Again and They’re Using Them
Redfin’s head of economics research, Chen Zhao, connected the spike in cancellations directly to growing inventory and affordability pressure:
“High housing costs and rising inventory have made homebuyers more selective. Home sellers outnumber buyers by a record margin, meaning the buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home.”
In many cases, deals are falling apart during the inspection phase. Buyers uncover issues, rerun the numbers, and decide the home isn’t worth the price anymore.
Some of the most common drivers behind canceled deals include:
Structural or maintenance problems uncovered during inspections
Monthly mortgage payments turning out higher than expected once rates and insurance are factored in
Homes feeling overpriced compared to new inventory coming online
Redfin agents are seeing buyers push harder on repairs and pricing. When sellers don’t budge, buyers are more willing to walk.
Where Cancellations Are Spiking the Most
The jump in canceled deals isn’t the same everywhere. In December, the highest cancellation rates among major metros were mainly in Sunbelt states, with one Midwestern standout.
Atlanta: 22.5%, up from 19.6% in November
Jacksonville, FL: 20.6%
San Antonio, TX: 20.6%
Cleveland, OH: 20.2%
Tampa, FL: 19.4%
Atlanta’s market has shifted quickly, with sellers now outnumbering buyers by more than 80%. That’s changed how much leverage buyers have in negotiations.
On the other end of the spectrum, some markets are still seeing relatively few deals fall apart:
Nassau County, NY: 3.8%
San Francisco, CA: 4.2%
San Jose, CA: 8.9%
New York, NY: 10.5%
Even with cancellations rising nationwide, what’s happening on the ground still varies significantly from market to market.
The Fastest Risers and What It Signals for 2026
Some of the steepest increases are showing up in markets that saw intense competition over the past few years.
Metros with the largest year-over-year jumps in cancellations include:
San Jose, CA: up 6.8 percentage points to 8.9%
Oakland, CA: up 6.3 points to 11.3%
Sacramento, CA: up 4.7 points to 17.9%
Atlanta, GA: up 4.4 points to 22.5%
Las Vegas, NV: up 3.5 points to 19%
A handful of metros moved in the opposite direction:
Detroit, MI: down 8 percentage points
Warren, MI: down 2.8 points
Pittsburgh, PA: down 2.3 points
Los Angeles, CA: down 1.1 points
Nassau County, NY: down 0.7 points
Looking ahead, Redfin economists expect affordability to gradually improve in 2026 as mortgage payments ease, price growth slows, and wages rise faster than housing costs.
That environment points to buyers staying selective. With more inventory to choose from and less urgency driving decisions, walking away from a deal has become part of the process.
Deals are holding together when homes are priced right and inspection issues are handled upfront. When they aren’t, buyers are far more comfortable moving on.
Key Details:
Redfin reports roughly 40,000 U.S. home-purchase agreements were canceled in December, equal to a record-high 16.3% of pending sales, up from 14.9% a year earlier.
Atlanta posted the highest cancellation rate at 22.5%, while Nassau County remained lowest at 3.8%.
Housing Market - January 27, 2026 - Sarah Lentz
https://nowbam.com/contract-cancellations-just-hit-the-highest-level-on-record/
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