While rate drops spurred activity, things like the government shutdown have buyers pushing pause
While a decline in mortgage rates has boosted market activity, lingering uncertainties have led some potential homebuyers to reconsider.
Redfin reported that 15% of homebuying contracts were canceled in September. This was a year-over-year increase from 13.6%.
The reasons for cancellations have varied. A swing in market conditions may have left buyers and sellers unwilling to budge from expected deal terms. Some buyers are less likely to move forward with a property that might need work after closing.
Add to those common reasons an ongoing government shutdown, which is causing even buyers not directly impacted to pause making major purchases.
Melissa Cohn (pictured top), regional vice president of William Raveis Mortgage, said the recourse for buyers who might reconsider varies by state.
“I had one buyer who backed out, but I think that he realized that he had gone in a little bit over his head,” Cohn told Mortgage Professional America. “In New York, when you sign a contract, the contract is signed, and if you find something wrong with the property or during the inspections, too bad, you've already signed a contract.
“In Florida, contracts all have what we call inspection periods, which allow a buyer to go through not only a physical inspection of the property, but also a financial inspection of the property if it's a condominium.”
People being picky
Because there are both common and uncommon reasons why borrowers might be hesitant, Cohn believes they’re only jumping into deals that they are completely certain about.
“People I've seen have been pretty careful about where they end up purchasing,” Cohn said. “If they see absolutely anything wrong, they are just jumping and saying, ‘I'm moving on to the next deal.’ But I think that has a lot to do with the fact that there is a lot more inventory in the marketplace today, and people can afford to be picky.”
Cohn said that in states where buyers can back out after an inspection, many are either canceling at the first sign of problems or trying to negotiate the price. Then it comes down to the seller if they’re willing to budge.
“If it's something you thought you wanted, and then an inspector finds several flaws, why would you have to put yourself into a property that you're going to have to go out and do some work?” she said. “They'll either just cancel the contract or try to negotiate the price. And if it's something financial, they're willing to just bail, because no one wants to get caught in a condominium that has problems.”
The issues with condos have been well documented, as many borrowers have to turn to non-agency loans due to them being non-warrantable. Cohn said buyers are still willing to move forward on those condos, for the right concessions from the seller.
“There are different reasons why condos are non-warrantable,” Cohn said. “Let's say they're still finishing off their work on the deferred maintenance, and they have assessments that are ongoing. They know that those things will end, and if you can get the seller to pay for it, they're willing to proceed, but then you're not going to be able to get a conventional lender to proceed.
“You have to go to a portfolio lender. And buyers do. They want everything to look and feel good, and they're not really willing to compromise. That's what happens when you go into a little bit more of a buyer's market.”
Wrong house selected
Other brokers have spoken about contracts being broken. Kristi Hardy, executive vice president, area manager, and senior loan officer with Atlantic Coast Mortgage, told Mortgage Professional America that, even before the shutdown, she was hearing about deals falling through in the Washington, DC, area.
“I don't know if it is exclusive to my market, but we are seeing a lot of people back out of their contracts,” Hardy said. “That's something that's been happening this whole year. I do think that there are people backing out due to uncertainty.”
With mortgage rates easing and home prices stabilizing, Derek McGowan of McGowan Mortgages said the next few months could offer buyers a rare window of opportunity. https://t.co/LfH3CYp6QF
— Mortgage Professional America Magazine (@MPAMagazineUS) November 4, 2025
She attributed much of the buyer hesitation to the thought that buyers might have decided during the process that they hadn’t picked out the right house.
“Backing out of the contract, for me, means they aren't in love with the house,” she said. “So that goes to the realtor, like, ‘Are you showing them the right house?’ Usually, if someone really wants the house, they will find a way to make it happen. I still encourage people to buy, then if rates do come down, we will refinance to the lower rate.
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