Marc Norman, Associate Dean at NYU’s Schack Institute of Real Estate, sees nothing surprising in the sharp rise of home purchase cancellations sweeping across the United States — in fact, he says it makes perfect sense. In a recent New York Times feature, Norman helps explain why a growing number of buyers are walking away from signed contracts, and what it reveals about a housing market that has fundamentally shifted in their favour.
The numbers are stark. According to a Redfin analysis, over 40,000 home purchase agreements were cancelled in December alone, a 14.9% increase from the prior year, representing nearly 17% of all homes that went under contract that month. Norman notes it “made a lot of sense” to see cancellations concentrated in cities like Atlanta, Jacksonville, and San Antonio, where pandemic-era construction booms have left markets oversupplied with inventory and more sellers than buyers. It is a far cry from the frenzy of 2020 to 2021, when buyers routinely waived inspections just to win deals.
Norman points to a specific and often overlooked moment in the buying process where deals most commonly fall apart: the window between signing a contract and closing, when the true cost of homeownership comes into full view. As he explains, “During the period after signing the contract, when you start obtaining insurance bids, figuring out utilities, and estimating property taxes, that can come as a shock. You receive that bid and suddenly realize it has raised your escrow or mortgage payment by 10 to 15 percent.” With inventory rising and sellers outnumbering buyers by historic margins in some markets, buyers now have the leverage to walk away when those numbers don’t add up, and increasingly, they are.
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