January 2026 Real Estate Update: The Highest Contract Cancellations Across the U.S.

The U.S. housing market is entering 2026 with turbulence as contract cancellations reach record highs, signaling shifting buyer power and market uncertainty. Fresh data from Redfin and Realtor.com shows buyers walking away from deals at the fastest pace since tracking began.

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📉 Record‑Breaking Cancellation Rates

In December 2025, more than 40,000 home‑purchase agreements were canceled, equal to 16.3% of all homes that went under contract—the highest December cancellation rate since at least 2017. [cnbc.com], [markets.fi…ontent.com]

This is an increase from 14.9% the previous year, showing growing hesitation among buyers as affordability remains strained. [markets.fi…ontent.com]

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📍 Cities With the Highest Cancellation Rates

According to Redfin, these markets saw the most canceled contracts in December:

• Atlanta, GA – 22.5%
• Jacksonville, FL – 20.6%
• San Antonio, TX – 20.6%
• Cleveland, OH – 20.2%
• Tampa, FL – 19.4%
  [cnbc.com], [markets.fi…ontent.com]

Atlanta continues to lead the nation due to rising inventory and increased buyer leverage. [markets.fi…ontent.com]

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🏠 Why Deals Are Falling Through

1. Rising Inventory Is Empowering Buyers

Redfin reports that home sellers now outnumber buyers by a record margin, giving buyers more alternatives and less pressure to commit. [cnbc.com]

2. High Mortgage Rates & Affordability Issues

Many buyers are walking away after realizing monthly payments will exceed their budget. Inspection contingencies often serve as an exit route, even if cost is the real concern. [markets.fi…ontent.com]

3. Economic Uncertainty

Concerns about layoffs, policy changes, and broader market instability are causing buyers—and sometimes sellers—to back out. [businesswire.com]

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📊 Realtor.com Confirms Buyer Pullback

Realtor.com reports that pending home sales dropped 9.3% month‑over‑month in December, reflecting weakened buyer enthusiasm and an increasingly cautious market. [realtor.com]

This decline is influenced by:

• Fewer new listings
• Consumer hesitation caused by limited inventory
• A belief that better deals may emerge soon

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🌎 Regional Market Trends

Southern Markets Hit the Hardest

Cancellation rates are especially high in Southern metros like Atlanta, Tampa, Orlando, Jacksonville, and San Antonio. These areas are seeing increased supply and elevated buyer leverage. [cnbc.com], [nationalmo…sional.com]

West Coast Markets See Big Jumps Too

Cities like San Jose, Sacramento, and Oakland posted significant increases in cancellation rates, though overall levels remain lower than the Sun Belt. [realtytimes.com]

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💡 What This Means for 2026

The elevated cancellation rates paint a picture of a market transitioning toward balance:

• Buyers now have more negotiating power
• Price corrections are becoming more likely
• Sellers need to adjust expectations, especially in inventory-heavy markets
• Affordability may improve later in 2026 as mortgage rates soften and wages rise [realtytimes.com]

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📝 Final Thoughts

Contracts are unraveling at a record pace, signaling a housing market where buyers feel empowered to walk away rather than overpay. The latest findings from Redfin and Realtor.com show a market cooling from the frenzy of past years and resetting into a more balanced environment.