Homebuyers in America seem to be getting cold feet.
In July, 15.3% of home-purchase agreements fell through across the U.S. That works out to about 58,000 agreements — the highest cancellation rate for July on record [1]. That’s according to data from real estate platform Redfin, which blames high homebuying costs for making buyers “skittish.”
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But the high costs of buying a home aren’t the only cause for this increased cancellation rate. Economic uncertainty — which includes rising inflation and a slowing labor market — isn’t exactly spurring on buyers who may already have cold feet.
“Buyers are having economic nausea — they’re feeling queasy about the market,” Jeremy Caleb Johnson, an associate broker with Long & Foster in Virginia Beach, told Bloomberg [2]. "Sometimes it’s easier for them to cancel and get some fresh air and breathe.”
What the numbers are telling us
Indeed, as the summer comes to a close, the housing market has slowed down due to an impasse between buyers and sellers, according to Realtor.com’s late summer update [3]. In some cases, frustrated sellers are deciding to take down their listings and wait for the market to improve, as opposed to settling for offers that are well below expectations.
While mortgage rates are trending downward, a 30-year mortgage currently averages about 6.5% [4]. And home prices are nearly 50% higher than just five years ago, according to the Case-Shiller Home Price Index [5].
Furthermore, higher home prices are accompanied by higher insurance premiums and property taxes. Home insurance premiums have increased 57% from 2019 to 2024, according to The State of the Nation’s Housing 2025 report. In 2024 alone, premiums increased 14%, with climate disasters partially to blame. And property taxes increased 12% between 2021 and 2023 [6].
These days you need an annual household income of $116,986 to buy a typical home, according to Bankrate. “That’s almost a 50 percent increase since early 2020, when the income needed to buy a typical home was $78,236,” according to the study.
With consumer confidence lagging and costs going up, it’s not surprising that home purchase cancellations are so high. But there’s another factor at play, too.
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Buyers have more options
A few years ago, buying a home felt like participating in the Hunger Games, where intense bidding wars drove up prices and led many buyers to forgo inspections.
Now, buyers have options. With more homes on the market, there are fewer buyers to compete with, so that panicked sense of urgency is gone. That means buyers have the negotiating power and therefore aren’t in a rush to close.
Even after they’ve submitted an offer, buyers are choosing to back out during the inspection process if they discover an issue they don’t want to fix, or if a more desirable home becomes available, according to Redfin.
The most common reasons for backing out of a deal? Cleveland Redfin Premier real estate agent Bonnie Phillips said the top reasons include “cold feet” and issues with inspections. She also said cancellations are more common among buyers using FHA and VA loans. Cancellations were most prevalent in San Antonio (22.7%), followed by Fort Lauderdale (21.3%) and Jacksonville (19.9%).
What buyers can do to keep costs down
It might be a buyers’ market right now, but there are some signs that we could eventually see a more balanced market.
“It’s worth noting that the housing-market tides are starting to shift slightly. Mortgage rates have been coming down, which could bring some sidelined buyers back to the market, and supply is also ticking down, which could increase buyer urgency,” according to Redfin.
Still, for the moment, buyers seem to have the upper hand. If you’re looking to buy, there are some steps you can take to (somewhat) reduce the costs of homeownership.
Saving up 20% (or more) for a down payment can be challenging, but the bigger your down payment, the smaller your mortgage. Plus, you won’t have to pay for private mortgage insurance, which protects the lender against default.
You can also reduce the term of your mortgage or opt for bi-weekly payments instead of monthly payments, both of which can save money in interest over the course of your loan.
But you’ll also want to keep household costs at no more than 30% of your income (including insurance and property tax). Paying anything more than 30% means you’re at risk of becoming cost burdened. Also, make sure you’ve set aside enough for closing costs (typically 3% to 4% of the sale price) and other related expenses.
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[1]. Redfin. “Home Purchases Are Getting Canceled at a Record Rate”
[2]. Bloomberg. “Homebuyers in the US Canceled Contracts at Record Rate for July”
[3]. Realtor.com. “Housing Market Grinds to a Halt in Late-Summer Doldrums”
[4]. Freddie Mac. “Mortgage Rates”
[5]. Federal Reserve Bank of St. Louis. “S&P CoreLogic Case-Shiller U.S. National Home Price Index”
[6]. Harvard Joint Center for Housing Studies “2025 The State of the Nation’s Housing”
[7]. Bankrate. “Study: Hopeful homebuyers need income of nearly $117,000 to afford typical home in U.S.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.