Redfin Reports 1 in 7 Pending Home Sales Are Getting Canceled, the Highest Share During This Time of Year on Record

Rhea-AI Summary

Redfin (NASDAQ: RDFN) reports that 14.3% of U.S. home-purchase agreements were canceled in January 2024, marking the highest cancellation rate for this time of year since 2017. The increase from 13.4% a year earlier represents over 41,000 canceled deals.

Key factors driving cancellations include: rising housing inventory reaching its highest level since 2020, declining pending home sales, economic uncertainty, and high housing costs with January's average mortgage rate at 6.96%. Atlanta leads nationwide with a 19.8% cancellation rate, followed by Orlando (18.2%), Las Vegas (17.9%), and Houston (17.8%).

Florida's market shows particular weakness due to natural disaster concerns and rising insurance costs. Los Angeles experienced its highest January cancellation rate in eight years at 15.9%, largely attributed to the Palisades and Eaton wildfires. In contrast, San Francisco maintains the lowest cancellation rate at 4.1%.

Positive

• Housing inventory rose to highest level since 2020
• Weekly mortgage rates declined to 6.76% after January

Negative

• Record-high 14.3% cancellation rate for January
• Pending home sales fell to record low (excluding pandemic)
• Mortgage rates hit 8-month high at 6.96%
• Home sale prices increased 4.1%
• 37 of 50 largest metros saw increased cancellation rates

Insights

Financial Analyst

Redfin's latest report highlights a 14.3% home-purchase cancellation rate in January 2025 – the highest for this time of year since tracking began in 2017 and up from 13.4% a year earlier. This translates to over 41,000 canceled transactions nationwide, representing significant lost commission revenue for the company.

The geographic distribution of these cancellations reveals concerning patterns in key markets. Atlanta (19.8%), Orlando (18.2%), Las Vegas (17.9%), and Houston (17.8%) show the highest cancellation rates, while Bay Area markets remain more resilient with San Francisco at just 4.1%. Notably, Florida markets face particular challenges due to insurance costs, natural disaster concerns, and record-high inventory levels.

The primary factors driving cancellations – rising inventory, declining demand, economic uncertainty, and high housing costs – signal a market shifting toward buyers. This environment typically leads to longer transaction timelines, increased negotiations, and potentially compressed commission rates. For Redfin specifically, as a technology-focused brokerage, these market conditions mean their agents are spending more time on deals that ultimately don't close, reducing efficiency and revenue per agent.

With 37 of 50 major metros experiencing increased cancellation rates year-over-year, this trend represents a substantial headwind for Redfin's transaction-based revenue model in the near term. The Los Angeles market's spike to an eight-year high for January cancellations, attributed to wildfire disruptions, further compounds these challenges in a key metropolitan area.

Atlanta, Las Vegas, Houston and parts of Florida are seeing the highest share of deals falling through, with supply piling up in those areas. Los Angeles is among the metro areas with the biggest increase in canceled sales, due largely to January’s devastating wildfires

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Just over 41,000 U.S. home-purchase agreements fell through in January, equal to 14.3% of homes that went under contract that month, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s up from 13.4% a year earlier and is the highest cancellation rate for this time of year since at least 2017.

There are a few reasons today’s homebuyers are skittish:

• 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. More supply and less demand means the housing market has tilted in buyers’ favor, with some house hunters backing out during the inspection period because a better house for them has come along–or at least the promise of a better house.
• 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. Tariffs, layoffs, and federal policy changes are among the factors contributing to an air of instability. Some people are choosing to stay put.
• 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 U.S. home-sale price rising 4.1%. Combined with economic uncertainty, high housing costs are causing some would-be buyers to change their minds.

“I’m seeing more homebuyers back out of deals than usual, and I’m hearing the same from other agents and mortgage lenders in the area,” said Sam Brinton, a Redfin agent in Salt Lake City, UT. “Some buyers are getting cold feet with everything going on in the world. But even with more cancellations, there are also more buyers out there in general. The nice homes in desirable locations are selling quickly, and those buyers are less likely to cancel.”

Because a fair amount of sales are falling through, some Redfin agents are advising buyers to keep a close eye on homes they want to buy–even if they lost a bidding war for it. “It’s worth checking in with the listing agent about a week after the house goes under contract,” said Alison Williams, a Sacramento Redfin Premier agent. “Twice since the start of the year, I’ve found out the original buyer canceled the contract, and my clients were able to get their offers accepted before the home went back on the market.”

The portion of home-purchase agreements that are getting canceled is above typical levels for the start of the year, but it’s lower than the cancellation spikes Redfin saw at the start of the pandemic and in late 2022. A record 16.4% of deals were canceled in March 2020, when the onset of the pandemic scared away many buyers. And nearly as many deals were canceled in October 2022, when mortgage rates soared above 7% for the first time in 20 years. That development that sidelined a lot of house hunters and gave the ones who remained more leeway to back out of contracts if a home wasn’t perfect.

Florida, Other Parts of the South Are Seeing Highest Share of Deals Falling Through

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, where 18.2% of deals were canceled, Las Vegas (17.9%), Houston (17.8%) and Jacksonville, FL (17.8%). This analysis includes the 50 most populous U.S. metros.

U.S. metro area	Share of pending home sales that fell through (Jan. 2025)	Share of pending home sales that fell through (Jan. 2024)
Atlanta	19.8%	16.6%
Orlando, FL	18.2%	16.8%
Las Vegas	17.9%	16.4%
Houston	17.8%	15.5%
Jacksonville, FL	17.8%	16.4%

Two of the five major metros with the highest share of canceled deals are in Florida. The Sunshine State’s housing market is cooling due to the increasing frequency of natural disasters and soaring home insurance and HOA fees.

Some Florida buyers are backing out of deals because there’s so much inventory available; in fact, there are more homes for sale in the state than ever before. Redfin agents in certain parts of the state say more supply means buyers have license to be fickle: If an issue comes up in the inspection period, some buyers are backing out because they know they can pivot to buy another home that doesn’t have that issue.

Home-purchase agreements are getting canceled at the lowest rate in the Bay Area. San Francisco has the lowest share, with 4.1% of deals following through, followed by San Jose, CA (5.9%). Rounding out the top five are Nassau County, NY (6.8%%), Oakland, CA (8.4%) and Seattle (8.7%). All of those markets are currently tilting toward sellers, with a limited amount of supply on the market, meaning buyers typically don’t have many other choices if they back out of a deal.

Amid Wildfires, Home-Purchase Cancellations in Los Angeles Rose to Highest January Level Since 2017

In Detroit, 17.4% of home-purchase agreements are falling out of contract, up from 13.1% a year ago–the biggest increase among the major U.S. metros. Next come Atlanta (19.8%, up from 16.6%), Virginia Beach (15.2%, up from 12.1%), New Brunswick, NJ (11.8%, up from 9.1%) and Los Angeles (15.9%, up from 13.2%).

U.S. metro area	Share of pending home sales that fell through (Jan. 2025)	Share of pending home sales that fell through (Jan. 2024)	Increase in share of pending home sales that fell through, YoY (in percentage points)
Detroit	17.4%	13.1%	4.3 pts.
Atlanta	19.8%	16.6%	3.2 pts.
Virginia Beach, VA	15.2%	12.1%	3.1 pts.
New Brunswick, NJ	11.8%	9.1%	2.7 pts.
Los Angeles	15.9%	13.2%	2.7 pts.

In Los Angeles, the percentage of pending sales falling through hit its highest January level in eight years. That’s likely because of the devastating Palisades and Eaton wildfires, which destroyed thousands of homes in the Los Angeles area and majorly disrupted daily life for Southern California residents.

Thirty-seven of the 50 most populous metros saw home-purchase cancellations rise, as a percentage of all pending sales.

The biggest declines were in Fort Worth, TX (16.2%, down from 18%), Fort Lauderdale, FL (17.2%, down from 18.6%), Philadelphia (11.8%, down from 13.2%), Cleveland (16%, down from 17.1%) and Columbus, OH (14.1%, down from 15.1%).

To view the full report, including charts, methodology, and additional metro-level data, please visit: https://www.redfin.com/news/pending-sales-canceled-january-2025

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.8 billion in commissions. We serve approximately 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250228835414/en/

Contact Redfin

Redfin Journalist Services:

Ally Forsell, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What is the current home purchase cancellation rate for Redfin (RDFN) in January 2024?

14.3% of home-purchase agreements were canceled in January 2024, representing over 41,000 deals and marking the highest rate for this time of year since 2017.

Which U.S. cities are experiencing the highest RDFN home purchase cancellation rates?

Atlanta leads with 19.8%, followed by Orlando (18.2%), Las Vegas (17.9%), Houston (17.8%), and Jacksonville (17.8%).

Why are Florida's RDFN home purchase cancellations increasing in 2024?

Florida's cancellations are rising due to increasing natural disasters, soaring home insurance and HOA fees, and record-high housing inventory levels.

What factors are causing the rise in RDFN home purchase cancellations?

Key factors include rising housing inventory, falling demand, economic uncertainty, high mortgage rates (6.96% in January), and elevated home prices.

How has the Los Angeles wildfires affected RDFN home purchase cancellations?

Los Angeles reached its highest January cancellation rate in 8 years at 15.9%, primarily due to the devastating Palisades and Eaton wildfires.