Homebuyers Back Out at Near-Record Rates as Cash Buyers Dominate Luxury Market
Contract cancellations hit near-record highs as 7.4% rates wipe out $22K in purchasing power for median buyers
Homebuyers are walking away from purchase contracts at near-record levels, even as the broader housing market shows signs of shifting in their favor. The culprit: mortgage rates that jumped 74 basis points in six weeks, wiping out roughly $22,000 in purchasing power for a household budgeting $2,000 a month for principal and interest.
Realtor.com’s third-quarter market clock, released Monday, shows the national market at 4 o’clock — one hour closer to buyers’ territory than last quarter. Seller’s markets have dropped from 39 to 27 over the past year. Buyer’s markets rose from 13 to 17. But the aggregate numbers mask a deepening split.
Luxury buyers, many paying cash, are keeping the high end moving. Everyone else is getting squeezed. Rates climbed from 6.66% in late August to 7.4% by Oct. 8, according to Realtor.com senior economist Jake Krimmel. That spike alone erased five figures of buying power for the median borrower.
The result: contract cancellations are surging. Buyers who signed when rates were lower are either unable to qualify at current rates or unwilling to stretch. Sellers, facing more inventory and fewer qualified buyers, are cutting prices and offering concessions — but not enough to offset the rate hit.
The divergence shows up geographically. The Midwest accounts for 16 of the 27 remaining seller’s markets, where lower price points keep demand relatively steady. The South leads with 14 buyer’s markets, up three since September 2025. The Northeast saw seller’s markets collapse from 11 to five as inventory rose in high-cost metros like Boston and Providence. The West went from zero buyer’s markets in June to three by September — Bakersfield, Riverside, and Colorado Springs all flipped.
Only two metros sit at peak buyer’s market: Greenville, South Carolina, and Nashville, Tennessee. Just one — Hartford, Connecticut — remains a peak seller’s market.
Fifty-five markets sit in balanced territory. Forty-nine are loosening toward buyers. Six are tightening toward sellers. The clock is moving, but the hands are heavy.
