Why MORE Buyers Are Canceling Home Contracts!

Why 15% of Home Sales Fell Out of Contract in July 2025. What Buyers & Sellers Need to Know

In July 2025, more than 15% of home sales nationwide fell out of contract, the highest rate in years. If you’re a buyer or a seller, it’s important to understand what’s going on and how to protect yourself from becoming part of that statistic.

I'm Jeremy Knight, your favorite Austin Realtor, and I talked with agents from all over the country to get their take on why contracts are falling apart. Here’s what you need to know.

The Big Picture: Market Uncertainty

A cooling job market and economic instability have shaken buyer confidence. Revised job numbers from May and June saw over 250,000 jobs removed from prior counts, the largest reduction since 1968 outside of a recession. Buyers losing jobs mid-process is a leading cause of canceled contracts.

Meanwhile, mortgage rates are holding around 6.5%, and mortgage application activity has increased. But buyer uncertainty is still high, especially as homeownership costs continue to rise.

Rising Costs: Insurance, Taxes, and Fees

Buyers aren’t just worried about home prices, they’re facing surging insurance premiums (up 50%+ in places like Illinois and Arizona), rising property taxes (especially in Texas), and hidden fees that aren't always clear upfront.

Many buyers experience sticker shock when they finally receive their fee sheet during escrow. That last-minute realization leads to cold feet, especially if they weren’t properly prepped by their lender or agent.

Realtor Responsibility: The Missing Buyer Consultations

Let’s be real: some agents aren't preparing their clients well. As a buyer, you need a full consultation before ever stepping into a home. Understand your loan pre-approval, what fees you’ll face, what the option period means, and how inspections can make or break your deal.

Agents should be walking buyers through every phase of the process, and sellers need to be coached on pricing realistically and preparing their homes for inspections. If your agent isn't doing that, it's time to reconsider who you're working with.

Inspection Issues & Due Diligence

Inspections remain a top deal-breaker. From foundation issues to aging roofs to sewer problems, many buyers are blindsided by repairs they didn’t anticipate. Sellers who aren’t willing or able to make fixes compound the problem.

Pro Tip: Ask key questions before making an offer:

• How old is the roof?
• Are there known foundation issues?
• Has the home had a pre-inspection?
• Will insurance cover this home?

The more you know upfront, the less likely you are to back out during your option period and lose money on inspections or deposits.

Cold Feet & Too Many Choices

In high-inventory markets like Austin (with over 15,000 homes on the market), buyers are quick to jump ship if a better home appears.

Others back out simply due to emotional second-guessing, or because the long-term costs suddenly feel overwhelming. Some cancel because of financing falling through or contingency sales collapsing when their current home doesn't sell.

What Sellers Can Do:

1. Pre-inspect your home to avoid surprises.
2. Price realistically: don’t get caught chasing a fantasy number.
3. Be willing to negotiate repairs post-inspection.
4. Vet buyers' seriousness: Have they truly researched the neighborhood, schools, commute, etc.?
5. Avoid weak contingency offers if you have better options.

What Buyers Should Do:

1. Get pre-approved and review a full cost breakdown.
2. Sit down for a buyer consultation with your agent.
3. Ask for seller disclosures before making an offer.
4. Call your insurance provider ahead of time.
5. Prepare to negotiate, but don’t expect every seller to fix everything.
6. Don’t rush. Do your due diligence before putting down money.

Final Thoughts

With 15% of homes falling out of contract, the biggest takeaway is this: Preparation matters. Whether you’re buying or selling, the agent you work with can make or break your experience. Ask questions, get informed, and don’t settle for less.

This is still a solid market for the right buyer or seller, but success takes planning and clarity.

Need help navigating your next move? Let’s talk.

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— Jeremy Knight