Homebuyers are backing out of deals at the fastest pace since 2017
A “pending sale” sign is posted in front of a home for sale in Larkspur, California, on November 30, 2023.
Justin Sullivan | Getty Images
Severe fluctuations in the housing market and the overall economy are reducing home sales at an alarming rate.
According to real estate brokerage firm Redfin, more than 40,000 home purchase contracts signed in December were canceled; this represents 16.3% of all homes under contract. This rate increased compared to 14.9% in December 2024.
This is also the highest share since Redfin began tracking this metric in 2017.
“High housing costs and rising inventories have made home buyers more selective,” said Chen Zhao, head of economic research at Redfin. “Home sellers are outselling buyers by a record margin, which means buyers in the market have options and can walk away if they believe they can find a better or more affordable home.”
There were nearly 47% more home sellers (or 631,535 outnumbered) than buyers on the market in December, according to a separate report from Redfin. This is the largest difference on record dating back to 2013 and is up 7.1 percentage points from the previous month.
“I call 2025 the year of the seller because I had so many sellers reaching out to me,” said Ashley Rummage, a real estate agent from Raleigh, North Carolina, who participated in the latest CNBC Housing Market Survey. “They were reaching out to us because they had a lot of fears about the economy. They had a lot of uncertainty about the current administration, mortgage rates, affordability. Those are all challenges this year.”
Regionally, the most contract cancellations in December were in Atlanta (22.5%), followed by Jacksonville, Florida (20.6%), San Antonio, Texas (20.6%), Cleveland, Ohio (20.2%) and Tampa, Florida (19.4%). Cancellations were least common in the New York metropolitan area, San Francisco and San Jose, California.
According to the National Association of Realtors, pending sales actually dropped a whopping 9% in December compared to November, so the numbers were already low. Given the high cancellation rates, sales closing in January and February are likely to be quite weak.
