Florida Housing Market Suffers Wave of Cancellations as Deals Fall Through

Parts of Florida are seeing the highest number of home purchases falling through, according to a new report by Redfin, as unsold properties start piling up in some of the state's markets.

Why It Matters

A majority of housing experts expect home prices to soften and even decline across Florida this year as inventory grows and buyers remain cautious amid elevated mortgage rates.

In some of the most-overvalued markets of the Sunshine State, which boomed during the pandemic years when out-of-state people moved to Florida's sunny cities, markets are already experiencing significant slowdowns and are shifting in favor of buyers.

What To Know

More than 41,000 home-purchase agreements across the country fell through in January, Redfin found, equal to 14.3 percent of homes that went under contract that same month. That was up by 13.4 percent compared to a year earlier, and it was the highest cancellation rate for this time of the year since 2017, when the real estate brokerage started recording these numbers.

Redfin said there are typically more cancellations of pending sales near the end of the year and fewer in the spring, the busiest season for homebuying. The levels of cancellations reported in January is above typical levels for this time of the year, but it is lower than the peaks seen in late 2022 and at the start of the pandemic.

Florida recorded the highest shares of cancellations last month, according to Redfin. Orlando had the second-highest share of cancellations in the country after Atlanta, Georgia, with 18.2 percent of pending home sales falling through, up from 16.8 percent a year earlier.

Jacksonville had the fifth-highest share, with 17.8 percent of home sales being canceled, up from 16.4 percent a year earlier.

The Sunshine State's housing market is cooling down in part as a natural correction following years of booming during the pandemic, and in part due to the growing risk of more frequent and more severe natural disasters and rising home insurance and homeowners association (HOA) fees.

According to Redfin, "some Florida buyers are backing out of deals because there's so much inventory available; in fact, there are more homes for sale in the state than ever before."

Agents with the real estate brokerage in certain parts of the Sunshine State say "more supply means buyers have license to be fickle: if an issue comes up in the inspection period, some buyers are backing out because they know they can pivot to buy another home that doesn't have that issue."

Florida ended January with 172,209 homes for sale, the highest inventory of any month on record dating back to 2021, according to Redfin data, and up 22.7 percent compared to a year earlier.

What People Are Saying

Sam Brinton, a Redfin Premier agent in Salt Lake City, Utah, said in a statement accompanying the report: "I'm seeing more homebuyers back out of deals than usual, and I'm hearing the same from other agents and mortgage lenders in the area. Some buyers are getting cold feet with everything going on in the world. But even with more cancellations, there are also more buyers out there in general. The nice homes in desirable locations are selling quickly, and those buyers are less likely to cancel."

Alison Williams, a Sacramento Redfin Premier agent, said in a statement: "It's worth checking in with the listing agent about a week after the house goes under contract. Twice since the start of the year, I've found out the original buyer canceled the contract, and my clients were able to get their offers accepted before the home went back on the market."​​

What Happens Next

A majority of experts expect a modest price correction in Florida throughout 2025. Ed DiMarco, a Naples realtor, foresees slight declines in specific markets this year, especially those with oversupply of homes, while continued population growth and the state's tax-friendly policies will "help prevent steep drops in home values."

Researchers at Norada Real Estate Investments expect to see a 4 percent to 6 percent year-over-year increase in median home prices in Florida by the end of the year, but if mortgage rates spike, certain areas may see significant price corrections.