The Buyer Revolt Sellers Didn't See Coming

Min 1

Redfin released data on January 26th revealing a shift in market power that changes everything for investors.

Buyers canceled over 40,000 home purchase agreements in December, equal to just over 16% of homes that went under contract.

That's the highest December cancellation rate in records dating back to 2017.

The cancellation rate jumped from just under 15% a year earlier.

Chen Zhao, Redfin's head of economics research, explained the dynamic: home sellers outnumber buyers by a record margin, meaning buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home.

Here's what matters for investors: when buyers gain enough leverage to cancel deals at will, markets aren't just balanced—they're tilting toward buyers.

Sellers who thought December would bring motivated holiday buyers instead faced the highest walkaway rate on record.

If you're investing in real estate, this data signals which markets to avoid and which to target.

High cancellation rates indicate weak seller pricing power and softer fundamentals. Low cancellation rates show markets where demand still exceeds supply and properties command premium prices.

Min 2

The numbers reveal dramatic regional differences in buyer behavior.

Atlanta led the nation with buyers canceling over 22% of pending deals in December. Jacksonville and San Antonio both saw cancellation rates above 20%. Cleveland and Tampa rounded out the top five markets where buyers walked away most frequently.

Contrast that with coastal markets showing resilient demand.

Nassau County recorded cancellations below 4%. San Francisco came in around 4%. San Jose saw cancellations below 9%.

These markets maintain tight inventory and strong buyer commitment despite high prices.

Redfin also revealed that sellers outnumbered buyers by nearly 50% in December—the largest gap since records began in 2013.

Translation: for every two buyers in the market, there are three sellers competing for their business.

Here's the investor payoff: markets with high cancellation rates are shifting decisively toward buyers. That creates opportunity if you're positioned correctly.

Buyers walking away means sellers getting desperate. Desperate sellers make pricing concessions. Smart investors can acquire properties below recent comparable sales by targeting markets where cancellations are surging.

Min 3

Markets where cancellations jumped reveal pricing that hasn't adjusted to new reality.

San Jose saw cancellations rise by nearly 7 percentage points year-over-year despite remaining relatively low overall. That signals a market in transition—moving from seller dominance toward balance as buyers gain negotiating power.

Consider what record cancellation rates mean for property valuations.

When buyers can walk away from deals without consequence, sellers lose their primary leverage.

A property listed at $450,000 that goes under contract but then falls through forces the seller to re-list at lower prices or offer concessions to the next buyer.

Scale that dynamic across thousands of canceled transactions monthly.

Properties that might have sold at peak 2024 prices now sit on the market longer or sell for less as buyers exercise newfound selectivity. That creates downward pricing pressure even in markets where headline prices appear stable.

Min 4

Individual investors can exploit high-cancellation markets in ways institutions cannot.

When contracts fall through due to inspection issues or buyer remorse, those properties often return to market with motivated sellers willing to negotiate aggressively.

Large investment funds avoid markets with high cancellation rates because they signal fundamental weakness.

Their investment committees want markets showing strong buyer commitment and low fallout rates. That institutional avoidance creates opportunity for nimble investors willing to work harder finding deals.

Here's your edge: target markets where cancellation rates are rising but haven't yet reached extreme levels.

These are markets in early stages of shifting toward buyers. You can still find reasonable inventory but sellers haven't fully adjusted pricing to reflect weakening demand.

Atlanta's 22% cancellation rate likely means that market has already overcorrected—sellers there are probably pricing aggressively low to avoid deals falling through.

Better opportunity exists in markets showing cancellation rates around 15% to 18% where sellers haven't yet panicked.

The risk? If you buy in a high-cancellation market and fundamentals continue deteriorating, your property could sit without offers when you eventually sell.

Markets showing rising cancellations often continue that trend for several quarters before stabilizing.

Min 5

This cancellation surge reveals buyers have regained leverage after years of seller dominance.

Rising inventory gives them choices. Smaller price discounts give them negotiating room. The ability to walk away gives them ultimate power.

Redfin noted buyers frequently use inspection contingencies to cancel deals even when their real concern is affordability.

They might discover a minor structural issue during inspection but their actual motivation is realizing mortgage payments are too expensive. The inspection gives them a clean exit.

For investors, this environment rewards selectivity.

Don't compete for properties in low-cancellation coastal markets where you'll pay premium prices. Focus on markets where cancellations are rising and sellers are becoming desperate for committed buyers.

Takeaway

Redfin's data confirms the market shifted decisively toward buyers in late 2025. Record cancellation rates mean sellers have lost pricing power in many markets across the country.

Translation: if you're buying investment properties, wait for sellers to come to you with concessions rather than chasing listings at asking prices.

Markets with cancellation rates above 18% feature desperate sellers who will negotiate aggressively to avoid deals falling through.

The buying window is now through spring before sellers fully adjust pricing to reflect weakened demand.

Properties listed today often carry prices set when sellers still had leverage. Submit offers below asking, request concessions, and be willing to walk away if sellers won't negotiate.

Watch cancellation rates monthly in your target markets. If rates continue climbing, wait—markets will get softer and better opportunities will emerge.

If rates stabilize or decline, act quickly before seller leverage returns and pricing power shifts back.