Chicago Home Buyers Back Out of Deals Amid Market Uncertainty

Residential deals in Chicago are collapsing at a rising rate, with some brokers seeing more cancellations than ever as buyers get cold feet in an uncertain market.

“People are freaked out. They’re spooked by the market,” said Grigory Pekarsky, the managing broker at Vesta Preferred Realty.

In July, Vesta had the highest rate of canceled contracts the firm has ever recorded in a single month, Pekarsky said. He credited misinformation as a factor and said people are getting their economic outlook from less reliable sources, leading to a more pessimistic view.

“They don’t know what information is where, so people are just really, really skittish to get into deals,” Pekarsky said.

Chicago had 16 percent of pending home purchase agreements fall through in July, up from about 15 percent in July 2024, according to Redfin. Contract cancellations were similarly high in July 2023, when 16 percent of pending deals fell through.

That tracks with national trends, as skittish home buyers canceled about 15 percent of pending contracts nationally in July, the highest July rate dating back to 2017. Contract cancellations are seasonal, and they tend to spike in the summer months.

Chicago’s cancellation rate was above the national average, but well below metros like San Antonio, Fort Lauderdale and Jacksonville, which all saw about one-in-five pending contracts fall through last month.

Matt Laricy of Americorp, which ranked as Chicago’s top brokerage by sales volume last year, said he’s encountered a growing number of first-time buyers who go into the process before being mentally prepared to buy a home — he dubs them “renters posing as buyers.” Laricy’s brokerage team also saw record-high cancellations recently, he said.

“On average, younger people buying their first place are your main ones that are killing it,” he said. “And it’s always trying to find a way to kill it. It’s like they’re talking themselves into killing it.”

Contracts are being canceled for several reasons, but economic uncertainty is a big factor, agents said. With high prices and interest rates, and uncertainty over where the market is headed, potential buyers are more willing to pull out if they think they’re not getting the best deal.

Another factor pushing up contract cancellations is the large swings in demand between the first half and the last half of the year, which is becoming more pronounced, Fulton Grace’s Patrick Shino said.

Sellers will receive multiple offers during the hot early months, and buyers are more eager to lock in a contract when they get the chance. Later in the year, demand slows down, and buyers have more leverage than they did a few months earlier. New listings hitting the market or price cuts on properties that were once out of a buyer’s budget push some to back out of deals, Shino said.

All these factors are making deals more tenuous, and they can also fall apart when inspections reveal problems the prospective buyer doesn’t want to deal with, Engel & Völkers broker Jennifer Ames said. Home improvements or upcoming condo building special assessments that the buyer could afford are sometimes used as excuses to back out of deals.

“They’re already feeling pushed due to lack of inventory to pay more than they’re comfortable paying,” Ames said. “So they feel like they’re maxed out. And then when they do their inspection, things that in a normal market might be fine, it pushes them over the edge.”