US Home Sale Cancellations Hit Near-Record High

Home sale cancellations have climbed to near-record levels across the United States, a fresh sign that higher mortgage rates are prompting buyers to rethink their plans. Nationwide, 14.5 percent of homes that went under contract in September fell out of contract, according to Redfin data, the highest share on record apart from the early months of the pandemic. The surge in home sale cancellations marks the latest evidence that the market has tilted decisively toward buyers.

The September figure capped a bruising month for demand and a record month for home sale cancellations. Pending home sales fell 4 percent from August, the steepest monthly decline in more than three years, and the number of homes going under contract was the lowest for any month since spring 2014, apart from the April 2020 freeze. For the first time in three years, pending sales declined year over year in all 50 of the largest metropolitan areas. Seattle recorded the sharpest drop at 24.4 percent, followed by Los Angeles, San Diego and Anaheim.

Cancellation hotspots map the country's biggest buyer's markets. Jacksonville, Florida, led the 50 largest metros with 19.9 percent of deals canceled in September, followed by Tampa at 18.8 percent, Las Vegas at 18.6 percent, San Antonio at 18.5 percent and Phoenix at 18.4 percent. San Francisco, one of the last seller's markets, had the lowest share at 2.8 percent. Canceled home contracts are clustering where buyers hold the leverage.

Borrowing costs are the central culprit. Freddie Mac's weekly 30-year mortgage rate averaged 7.28 percent at the end of September, and the Mortgage Bankers Association put the average conforming rate at 7.50 percent for the week ending October 9, the highest since November 2023. Higher mortgage rates 2026 levels have reduced what a given household income can support, driving home sale cancellations, and the pattern of buyers retreating when rates breach 7 percent has proved consistent across multiple market cycles this year.

Why Home Sale Cancellations Are Surging

When house hunters have abundant options, they are more likely to back out if an inspection turns up problems, the monthly payment looks different than expected or a better listing appears. Analysts note that home sale cancellations are common precisely because buyers are in the driver's seat. Redfin called September the strongest buyer's market in its records. These buyer market trends show no sign of reversing while inventory keeps climbing.

Supply is indeed building. Total active inventory rose 1.2 percent from August to its highest level since March 2020, while new listings barely moved, up just 0.3 percent. The buildup reflects homes lingering unsold, with home sale cancellations feeding listings back into supply, rather than a flood of fresh sellers. Nearly one in five active listings saw a price reduction in September, and 60.5 percent of homes sold below their original asking price, extending an 18-month streak.

Price growth has nearly stalled. The median US home sale price rose 1.3 percent year over year to $393,895 in September, the smallest annual gain since February. Starter homes face even more pressure, with home sale cancellations concentrated at the entry level. Buyers canceled 17.3 percent of pending starter-home deals nationally as of the end of August, the highest share since late 2023, as rising rates hit entry-level budgets hardest. For first-time buyers, the US housing market remains punishing despite the extra leverage.

What Home Sale Cancellations Mean for Buyers

For buyers who stay in the market, the wave of canceled home contracts creates opportunity. Sellers who listed at prices set during stronger demand now face more price cuts, and nearly three in five transactions close below asking. Mortgage rates 2026 volatility means buyers should lock financing carefully and budget for payments at higher levels than the spring's lows. Tracking local cancellation rates can reveal which neighborhoods offer the most room to negotiate.

Analysts expect home sale cancellations to remain elevated through the fall as long as rates stay above 7 percent, extending the buyer market trends that have defined 2026. If borrowing costs ease, pent-up demand could return quickly. Until then, the near-record cancellation rate stands as the clearest measure of buyer caution in today's US housing market, and a reminder that in this cycle, signing a contract is only the first step.