Real Estate Contract Cancellations Are at a “Record High”… but Here’s the Full Story

News headlines can be misleading, and real estate news is no exception.

Lately, you may have seen headlines warning that home contract cancellations have surged to a “record high” and are at their highest level since 2017. If you’re thinking about buying or selling, that might sound like something you should be concerned about.

As a seller, it might make you wonder whether it’s going to be difficult — or even impossible — to get your house sold. As a buyer, you might question whether other buyers are sensing something you’ve missed and start second-guessing your decision. Or maybe you see it as a positive sign that the market is finally shifting back in favor of buyers.

But before jumping to any conclusions, let’s take a closer look at what the data actually says so you have some real perspective.

Let’s Put the Numbers in Context…

Many of the articles reporting on this point back to a recent report stating that nearly 1 in 7 homes are falling through, which is a record for this time of year.

In January 2026, 13.7% of pending home sales fell through, which is indeed the highest percentage of cancellations since January 2017.

However, that’s only a 0.6 percentage point increase compared to last January, and a 2.7 percentage point increase compared to January 2017.

For even more perspective, consider that during the ultra-competitive pandemic market — when homes were receiving multiple offers within days and buyers were waiving contingencies left and right — contracts still fell apart. Cancellations happen in hot markets. They happen in slow markets. They happen in balanced markets.

So yes, technically speaking, the headlines are true. But when you look at the numbers in context, it’s far less dramatic than it may initially sound.

What Does a “Cancellation” Actually Mean?

Before reading too much into the word cancellation, it helps to understand what that actually means in real estate terms.

A cancellation simply means a pending contract didn’t make it all the way to closing. And that can happen for a wide range of reasons. For instance:

• A buyer might get cold feet.
• Inspection issues may cause one party to walk away.
• Financing can fall through.
• An appraisal might come in lower than expected.
• Or personal circumstances — like a job loss or health issue — can change someone’s plans.

In other words, not every cancellation is some dramatic signal about the overall housing market.

And when a contract falls through, that doesn’t automatically mean the house won’t sell at all.

In many cases, another buyer steps in. Sometimes it’s the person whose offer was originally beaten out in a multiple-offer situation. Other times it’s a completely new buyer who comes along once the home returns to active status.

For sellers, a cancellation can certainly be frustrating, but it’s rarely the end of the road.

And for buyers, it’s not evidence that “everyone else knows something you don’t.”

It’s just something that happens to a certain percentage of real estate transactions each and every day, week, month, and year.

Why Local Context (And Your Agent) Matter Most

Because cancellations are a normal part of the process, the real question isn’t whether they happen… it’s whether they’re likely to happen to you, and how you handle it if it happens.

National headlines talk in broad percentages. But real estate market conditions can vary significantly from one city to another, from one neighborhood to the next, and even between different price points within the same town.

An experienced local agent can give you perspective on what’s happening specifically in your market, not just what’s happening nationally.

More importantly, a good agent can often help reduce the likelihood of a contract falling through in the first place. That might mean properly vetting a buyer’s financing, structuring smart contingencies, pricing strategically, anticipating appraisal challenges, or identifying potential red flags early.

But most importantly, when a cancellation does happen (and sometimes it will), an experienced agent can help you stay calm and make rational decisions instead of emotional ones.

The Takeaway:

According to recent headlines, real estate contract cancellations are at their highest January level since 2017. However, while that might sound alarming, it’s only a 0.6 percentage point increase compared to last January, and a 2.7 percentage point increase compared to January 2017.

While those claims are factually correct, cancellations are a normal occurrence, and the increases are not as drastic as they may sound.

Headlines are designed to grab attention. Before letting a headline impact whether you decide to buy or sell a home, make sure you’re looking at the full picture — ideally with a local agent who understands how it applies to you locally.