Prospective homebuyers are feeling hesitant and backing out of deals at a record pace as some sellers face ‘difficulties adjusting’ to new reality

At the same time, many sellers do not respond to the concerns of potential buyers, who are becoming more selective and seeking more concessions.

About 56,000 US purchase agreements were canceled in August, representing 15.1% of the homes that went under contract. That’s the highest share of August deals going back in records dating back to 2017. It’s also up from 14.3% in August 2024 and well above the post-pandemic housing frenzy rate of 11.4% in August 2021.

“Home purchases frequently decline because buyers and sellers are often not on the same page and are not willing to compromise,” Redfin said in its report.

In a survey of Redfin real estate agents, 70.4% said home inspection or repair issues were the reason they canceled contracts — by far the top reason.

This was followed by 27.8% who said buyer financing declined, 21% who said buyers were unable to sell their current home, 14.9% who reported changes in the buyer’s financial situation, and 12.9% who said the buyer found another home they liked.

Redfin

Additionally, many of the cities with the highest cancellation rates were in Florida and Texas, which saw an increase in housing supply after a pandemic-era exodus to those states led to a building boom.

Meanwhile, sellers still believe their homes will command high asking prices as they did during the housing boom of 2020 and 2021, or they paid too much for their property and aren’t willing to budge on the price.

A new reality for sellers

“Some are having a hard time adjusting to the fact that it’s no longer a seller’s market because it seems like just yesterday that homes were getting dozens of offers and fetching tens of thousands of dollars over the asking price,” Redfin said.

The report also noted that demand for lower-priced homes is increasing because overall homeownership costs have jumped in recent years, and these homes are more likely to encounter issues during inspections.

Insurance premiums have risen in states like Florida and California that have experienced more natural disasters, contributing to increased ownership costs.

Meanwhile, mortgage rates remain high although they have fallen since the Fed lowered record borrowing costs.

In reality, Pending home sales are already down in September, the first time in nearly three months, even as the average weekly mortgage interest rate fell for nine straight weeks.

Amid weak demand… Home sales are headed for their worst year since 1995 As economic concerns spread from buyers to sellers. A Fannie Mae survey It showed earlier this month that nearly 70% of Americans believe the economy is headed in the wrong direction, and 73% believe this is a bad time to buy a home.

Given all this anxiety, sellers willing to accommodate buyers’ requests still sometimes can’t get over their cold feet.

“I worked with a seller who received 78 repair requests from a buyer after an inspection, and that was after the seller had already agreed to lower the $375,000 asking price by $25,000 because the house needed some improvements,” said Dawn Liedtke, a Redfin real estate agent in Tampa. “The buyer came back and said he would bear the cost of repairs, but only if the seller was willing to drop the price by another $100,000. The deal didn’t work out.”