Homebuyers Hit Pause: Pending Sales Slip as Contract Cancellations Surge

America’s housing market hit another speed bump in July. Pending home sales — signed contracts to buy existing homes — fell 0.4% from June, coming in weaker than expected. Still, deals were up 0.7% compared with July 2024, showing buyers are at least slightly more active than a year ago.

But the bigger story? Cancellations are spiking.

According to Redfin, 15% of pending contracts were canceled in July, the highest rate since the brokerage began tracking the metric back in 2017. Buyers in hot spots like San Antonio (22.7%), Fort Lauderdale (21.3%), and Tampa (19.5%) were the most likely to walk away.

Mortgage rates were still hovering around the 6.7% range in July, adding pressure to affordability. Rates have since cooled slightly to 6.51% in August, but the sting of elevated borrowing costs remains.

“Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant,” said Lawrence Yun, chief economist at the National Association of Realtors (NAR). “Buying a home is often the most expensive purchase people will make in their lives. This means that going under contract is not a decision homebuyers make quickly.”

Real estate agents are feeling the slowdown too. An NAR survey found just 16% of Realtors expect buyer traffic to improve over the next three months — a clear sign confidence is thin.

A regional split:

• Northeast & Midwest: pending sales dropped.
• South:
• West: the only region to post gains, up 7%.

Economist Jake Krimmel of Realtor.com summed it up bluntly:

“It’s been a ‘Cruel Summer’ overall: buyers remain squeezed by affordability challenges while sellers have been slow to adjust expectations, leaving the housing market stuck in neutral.”

Pending sales are an early indicator of future closings, typically leading finalized home sales by a month or two. With cancellations running high and affordability still strained, the market looks set to stay sluggish through the fall unless mortgage rates take a sharper dive — or sellers get more realistic on pricing.

For now, the message from July is clear: buyers are still circling, but more and more are getting cold feet before sealing the deal.

With input from CNBC and Bloomberg.