Buyers backed out of deals at a record rate last month 

Homebuyers were canceling deals at a record rate in December, a sign that they feel more comfortable being choosy in a market that continues to favor buyers. 

More than 40,000 home purchase agreements were canceled in December, according to Redfin, equating to about 16.3% of total contracts that month. That's up from 14.9% a year prior, and it's the highest share of December cancellations since Redfin began tracking the data in 2017.

Market conditions allowing buyers to 'walk away': The rise in cancellations coincides with a shift in the housing market, according to Chen Zhao, head of economics research at Redfin. "High housing costs and rising inventory have made homebuyers more selective," Zhao noted in the report.

"Home sellers outnumber buyers by a record margin, meaning the buyers who are in the market have options and may walk away if they believe they can find a better or more affordable home," Zhao added.

The data appears to back that up: The markets with more "options" — aka more listings — tended to have higher cancellation rates. Atlanta topped the list with a 22.5% cancellation rate in December, followed by Jacksonville (20.6%) and San Antonio (20.6%). In all three metro areas, sellers outnumbered buyers by 80% or more last month, a separate Redfin report found.

While the reality of high mortgage payments is the most likely cause of cold feet, buyers tend to use the inspection contingency as an easy out if any structural issues arise, according to the report.

Listings bounce-back coming? It's not just buyers who've been walking away in recent months. Sellers were pulling their listings at an elevated rate last fall, but there are signs that they're easing back into the market.

In his weekly look at residential real estate trends, Compass Chief Economist Mike Simonsen estimated that around 80,000 previously withdrawn home listings are now back on the market. That's roughly 11% of the active single-family inventory, up from about 9% a year ago. 

Because most of those sellers will also become buyers, that could lead to a boost in spring sales.

"I expect to continue to see the re-lists climb this spring, and we should also see the weekly pending sales start to climb in tandem," Simonsen said.

While it's still early, that dynamic is starting to play out. Pending sales in the third week of January were up about 8% compared to the same week a year ago, according to Simonsen's research — though that was also a time when near-7% mortgage rates were dampening home sales.

For now, Simonsen is waiting to see what happens next. "If the pendings don't climb," he said, "then that's the market giving us a different signal than I'm expecting, frankly."