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By Giulia Carbonaro
Senior Reporter
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Former pandemic boomtowns in the South led the nation for home sale cancellations in August, according to a new Redfin report, with Atlanta, Georgia, reporting the highest rate of buyers backing off deals.
A total of 1,532 home-purchase agreements were canceled in The Big Peach in August—the equivalent of 21 percent of all homes that went under contract that same month, up from 18 percent a year earlier. It was the highest percentage in the country, eclipsing the nationwide average of 15.1 percent.
But while Atlanta took the number one spot, seven Florida and Texas cities dominated the top ten, including Jacksonville, Orlando, Tampa, Fort Lauderdale, San Antonio, Houston, and Fort Worth.
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Where Are Home Sales Falling Through the Most?
After Atlanta, Jacksonville, Florida, had the second-highest rate of home-purchase agreements falling through, at 20.5 percent of all homes sold that month. It was followed by Orlando (20.2 percent), Tampa (19.4 percent), Las Vegas (19.4 percent), San Antonio (19.3 percent), Houston (19.2 percent), Fort Worth (18.6 percent), Fort Lauderdale (17.9 percent), and Phoenix (17.7 percent).
With the exception of Las Vegas and Phoenix, all of these cities are in the South, a region that experienced an explosion in demand during the pandemic, when many homebuyers flocked to places with more affordable housing and a lower cost of living.
Florida and Texas, in particular, responded to this boost in demand with a construction boom, adding hundreds of homes to their inventory. Many of these new homes, however, landed on the market when the pool of buyers had dried up due to a slowdown in domestic migration, higher borrowing costs, and rising home insurance premiums and property taxes.
The result is that these states now have very high inventory—and buyers are feeling confident that, if a seller does not meet their conditions, they will find another suitable property. In Florida, according to Redfin, there were 214,505 homes for sale in August, up 5.4 percent from a year earlier, and prices are falling. The median sale price of a home was $403,100, down 0.13 percent from a year earlier.
In Texas, there were 188,137 homes for sale in August, up 13.9 percent from a year earlier, and the median sale price of a home was $345,900, down 0.59 percent year-over-year.
When it comes to the lowest number of cancellations in the country, the top spot was taken by Nassau County, New York (4.5 percent), followed by San Francisco, California (5.9 percent), San Jose, California (6.9 percent), Montgomery County, Pennsylvania (8.8 percent), and Oakland, California, with 9 percent of home-purchase agreements falling through August.
Why Are So Many Homebuyers Getting Cold Feet?
Despite falling mortgage rates and higher price discounts across the country, homebuyers canceled purchases at a record rate in August, with one in seven sales falling through—many of which during the inspection.
Roughly 56,000 home-purchase agreements were canceled nationwide in August, equal to 15.1 percent of homes that went under contract that month—the highest share for any August in Redfin records, which date back to 2017.
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The main reason why buyers are backing out of deals is that they can afford to do so: there are now more options on the market than at any time in the past five years. Buyers are asking sellers to offer them price discounts, pay for necessary repairs, or give them other types of concessions—and if they are not willing to budge, they would look for alternatives elsewhere.
But often buyers are backing out because they have no other option. While a majority (70.4 percent) of agents surveyed by Redfin in September said that their sales fell through during the inspection or after repair issues were revealed, 27.8 percent said that they did so because a buyer’s financing fell through, while 21 percent said that the buyer was not able to sell their existing home.
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