Roughly 41,000 home purchase agreements were canceled in January, equal to 14.3% or one in seven homes that went under contract.
According to a new data report from Redfin (NASDAQ: RDFN), last month’s cancelation rate was up from 13.4% in January 2024 and is the highest cancellation rate for this time of year since at least 2017.
Redfin attributed this trend to an increased supply and declining demand in housing, thus creating a buyers’ market. Coupled with economic uncertainty and still-elevated mortgage rates, more buyers are changing their minds before committing to a deal.
Atlanta leads the nation in canceled deals, with one in five (19.8%) of January’s pending home sales falling apart. Other top markets for collapsed deals were Orlando (18.2%), Las Vegas (17.9%), Houston (17.8%) and Jacksonville, Florida (17.8%).
Still, the level of cancelations is below the record 16.4% of deals being canceled at the start of the pandemic in March 2020.
Yesterday, the National Association of Realtors (NAR) reported its Pending Home Sales Index (PHSI) tumbled by 4.6% to 70.6 in January, an all-time low; an index of 100 is equal to the level of contract activity in 2001. Year-over-year, pending transactions declined 5.2%.
