U.S. Housing Market Under Strain as More Homebuyers Back Out of Deals
Homebuyers are backing out of deals at the fastest pace ever recorded for December, adding fresh pressure to an already strained U.S. housing market.
- Homebuyer cancellations surged to a record 16.3% in December, the highest level ever recorded for that month.
- More than 40,000 U.S. home sales fell out of contract in just one month, highlighting rising buyer hesitation.
- High prices and increasing inventory are giving buyers more leverage to walk away, adding pressure to the housing market.
According to new data from Redfin, 16.3% of home purchase agreements were canceled in December, marking the highest cancellation rate for that month since records began in 2017. In total, more than 40,000 pending home sales across the United States fell out of contract during the month.
The latest reading represents a clear acceleration compared with recent years. In December 2024, 14.9% of deals were canceled, while December 2023 saw a similar rate of 14.7%. The jump to 16.3% highlights growing hesitation among buyers as affordability pressures remain elevated.
Sun Belt Markets See the Sharpest Pullback
Cancellation rates were especially high in several major Sun Belt cities that experienced rapid price growth in recent years.
Atlanta recorded the highest cancellation rate nationwide at 22.5%, followed by Jacksonville and San Antonio, both at 20.6%. These markets surged during the post-pandemic housing boom, leaving buyers more exposed to higher mortgage costs, appraisal shortfalls, and tighter financing conditions.
As prices remain high, buyers in these regions appear more willing to abandon deals rather than renegotiate at levels that strain household budgets.
Rising Inventory Shifts Leverage Toward Buyers
An increase in available housing supply is also reshaping market dynamics. With more homes sitting on the market, buyers are becoming more selective and less inclined to waive inspections or accept unfavorable terms.
This shift is giving buyers greater leverage to walk away in search of better opportunities, while sellers are increasingly forced to adjust expectations. Instead of bidding wars, a growing share of transactions is breaking down late in the process, reflecting a widening gap between asking prices and buyer confidence.
Structural Housing Issues Add Long-Term Pressure
Broader concerns about housing affordability were highlighted by PayPal co-founder Peter Thiel during an interview with Commonwealth Canada back in 2025.
Thiel drew on the ideas of 19th-century economist Henry George, arguing that real estate supply is “extremely inelastic,” particularly in cities with strict zoning laws. He warned that even modest population growth can lead to outsized increases in home prices, far outpacing wage growth and placing younger and lower-income households at a disadvantage.
Price Growth Reinforces Affordability Concerns
Long-term price data supports those concerns. Over the past five years, the S&P CoreLogic Case-Shiller U.S. National Home Price Index has risen by about 45%, underscoring how sharply home values have outpaced income growth for many Americans.
With cancellations climbing, prices still elevated, and structural supply constraints unresolved, the U.S. housing market is showing increasing signs of strain as buyer confidence continues to weaken.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
