Surge in home sale cancellations

More uncertainty in the market

We are continuing to see more data about how the latest economic uncertainty has affected the homebuying market. 

Our first story shows just how many home sale cancellations happened in March. This truly shows how buyers are reacting to all the news, and how they are becoming much more cautious.

While buyers are getting skittish, we do want to present ways to help any clients you have who are looking for ways to stay in the game despite the economic uncertainty and issues of affordability. In today’s Foundation Plans, we discuss ARMs (adjustable rate mortgages) and when and why they might make sense.

- James and David

Home sale cancellations surged in March

In March, tens of thousands of pending home sales collapsed as economic uncertainty made buyers think twice about making a major investment. Newsweek reports that roughly 52,000 purchase agreements were canceled in March, the equivalent of 13.4% of homes that were sold that same month. Here’s other takeaways from the report:

• This marks the third-highest rate of March cancellations since Redfin began collecting the data in 2017, surpassed only by March 2023 (13.7%) and March 2020 (16.4%).

• Boomtowns that took off during the COVID housing craze saw the most cancelled deals in March 

• Top 5 cities with the highest share of cancelled pending sales

  • Orlando, FL: 18.7%

  • Fort Worth, TX: 18.4%

  • San Antonio, TX: 18.1%

  • Las Vegas, NV: 18.0%

  • Miami, FL: 17.9%

Our take

When more than 1 in 8 home sales fall through, it’s not just a data point, it’s a reflection of buyer psychology in real time. With recession odds topping 50% in the betting markets, many buyers are hitting pause, not because they don’t want to buy, but because they’re unsure they can safely commit. Job security concerns, rising everyday costs, and lingering uncertainty are giving even well-qualified buyers reason to wait. That said, the slowdown in demand could bring some relief in softer home prices and, possibly, lower mortgage rates later this year. As agents, we will need to weather this storm. The key is helping clients stay informed and ready to move when the time is right.

Migration to the “Heartland” is spiking

For the first time since 1959, population growth in the U.S. heartland has outpaced the national average. According to Realtor.com’s latest report, the region, now home to 39% of the U.S. population, grew by 2.65% since 2020, slightly ahead of the 2.59% increase in the rest of the country. Affordable housing and strong job markets are driving the shift. Here’s what to know about the Heartland:

• Unemployment is below the national average (4.2%) in some of the big metros in this area (Nashville: 2.9%, Austin: 3.7%)

• Median list prices have increased between 17% and 47% from 2019 through early 2025 in these markets.

• Home search interest is above the national average in cities like Louisville, KY (1.5x) and Detroit, MI (1.2x)

Our take

This report confirms what we’ve long believed, but it’s encouraging to see the data back it up. For years, cities in the heartland were dismissed as “flyover country.” Now, they’re leading the charge in growth, opportunity, and livability. This shift should be a wake-up call to the regions people are leaving behind. If we want a dynamic, opportunity-rich economy, we need to embrace an Abundance Agenda. That starts with homebuilding. All types of housing are needed: single-family homes, apartments, condos, townhomes, and manufactured units. The path forward is clear: build, build, and build some more.

Markets with the most seller concessions

Home sellers gave concessions, such as closing cost help or repair credits, in 44.4% of U.S. home-sale transactions in Q1 2025, according to Redfin. That’s up from 39.3% a year earlier and just shy of the all-time high of 45.1% set in early 2023.

The data, based on rolling three-month reports from Redfin agents nationwide dating back to 2019, shows a clear trend: more sellers are sweetening deals to close sales. Why? Rising housing costs, economic uncertainty, and the highest inventory levels in five years are making buyers more hesitant, and giving them more leverage.

Here are the markets with the highest share of home sales with concessions in 2025:

1. Seattle, WA: 71.3%

2. Portland, OR: 63.9%

3. Atlanta, GA: 61.5%

4. San Diego, CA: 60.7%

5. Denver, CO: 59.2%

6. Los Angeles, CA: 56.1%

7. Sacramento, CA: 52.5%

8. Las Vegas, NV: 51.9%

9. Riverside, CA: 51.2%

10. Phoenix, AZ: 51.2%

Our take

These truly are amazing numbers! The spike in concessions is a clear sign that buyers are gaining leverage. With affordability stretched and inventory rising, sellers are having to give ground to get deals done. For agents, this is a crucial moment to educate both sides. Sellers need to understand that pricing aggressively and offering concessions might be the key to closing. Buyers, meanwhile, should know they have more room to ask, and they shouldn’t leave money on the table. The days of all-cash, no-contingency offers winning every deal are behind us (for now). This kind of market calls for a smart strategy, not panic. Sellers still have equity. Buyers still want homes. The question is how flexible both parties are willing to be to make the math work.

Schematics

The news that just missed the cut

• New squabble erupts over private listings 

• Time management hacks to sell more homes

• Use these scripts to build trust and rapport with clients

• How to make an offer that stands out

• Why Americans love McMansions

Foundation Plans

Advice from James and David to win the day

Even before the tariff turmoil, it was unlikely mortgage rates would fall below 6% this year, meaning that affordability will remain a real challenge for buyers. That’s why more buyers are taking a fresh look at Adjustable-Rate Mortgages (ARMs). According to CNBC, ARM applications are on the rise. But in our experience, many people still misunderstand how these loans work, and that misunderstanding can cost them. In today’s edition, we’re going to cut through the myths and show you when an ARM makes sense.

Don’t let their bad rep dissuade you – We’re not in 2008 anymore. ARM underwriting is much stricter than it used to be. Shady and risky lending practices have gone by the wayside. You actually have to qualify for an ARM and show that you're able to pay for a rate that adjusts upward. Consequently, fewer people can qualify for ARMs. As a result, there are fewer ARMs out there now than in the early 2000s. Before the financial crisis, ARMs made up about a third of all mortgage originations, but now that number is around 9.6%. 

Situations when ARMs make sense – There are two situations: 1) When buyers are going to live in the home for a short term, and 2) when rates are highly fluid. We’ll break down both situations:

• Situation #1: If your clients plan on living in the house for a short term (less than 10 years), they should consider getting an ARM. There's no reason to pay a slightly higher rate to lock in a 30-year fixed mortgage when they can get a cheaper initial rate through an ARM. In an adjustable-rate mortgage, there is a fixed-rate period, when the interest rate on the loan doesn't change. The initial period can range from six months to 10 years, but the most common terms are three, five, or 10 years. For example, a 5/1 ARM has a fixed rate period of five years, and then the rate resets once a year. So, if a buyer plans on living in a home for only a short time, they can sell the house or refinance the terms of their loan before the fixed-rate period ends, and avoid the risk of a potentially increasing mortgage rate.

• Situation #2: ARMs can also make sense when mortgage rates are high and unpredictable, as they are now. These loans typically offer lower starting rates, often a full percentage point below a 30-year fixed. For example, a buyer might secure a 5/1 ARM at 6%, compared to 7% for a traditional fixed loan. That difference can result in meaningful savings during the first five years. There are two possible rate scenarios from here: rates decline, or they either stay high or go up even higher. If rates decline, the homeowner can refinance into a lower fixed-rate mortgage. And, if rates rise or stay high, they still benefit from the lower ARM rate during the fixed period. Plus, if they plan to move or sell before that period ends, they can avoid any adjustment entirely. Either way, the buyer comes out ahead, especially if they’re not planning to stay in the home for the long haul. The key is knowing your timeline and staying engaged. This strategy won’t be right for everyone, but for buyers with shorter time horizons, ARMs can offer real financial flexibility.

As agents, we need to bring all reasonable options to the table for our clients. We understand that there is still a huge resistance to using ARMs after the ‘08 crisis, but again, things are different now. We encourage you to familiarize yourself with the subject. Start with this excellent interview with Redfin economist Chen Zhao.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Just because you are doing a lot more doesn't mean you are getting a lot done. Don't confuse movement with progress!” – Denzel Washington

Progress isn’t about doing more, it’s about doing what matters most. Be intentional and focused in what you choose to do, friends. That’s how you build the business and life you want.

- James and David