While several factors are cited, including the high proportion of military buyers using VA loans and a less robust job market compared to other Texas cities, no single cause definitively explains San Antonio's uniquely high cancellation rate.
Wary buyers and stubborn sellers are stifling the market around the country. This standoff is particularly tense in San Antonio, which led the nation in cancelled home purchases last month.
"Sellers are stuck in 2021, and buyers want a hell of a deal. There's a lot of that mindset still around here," said Clint Neal, co-founder of the leading San Antonio brokerage Neal and Neal. "The buyers have all the leverage, but the sellers think they don't."
Over 15 percent of home purchases nationally were canceled in July, according to Redfin. Texas and Florida had the highest shares of deals fall through.
San Antonio had 730 canceled agreements, or 22.7 percent of contracts, in July. Fort Lauderdale and Jacksonville followed with 21.3 percent and 19.9 percent of contracts lapsing.
Florida and Texas have the strongest homebuilding activity in the country, and production builders like Lennar and D.R. Horton are doing their best to tempt buyers. It's possible that buyers are backing out of existing home trades in favor of incentivized new builds, according to Redfin.
San Antonio has a strong homebuilding market, but it's far from the top in Texas. In a May ranking of home construction markets, Houston took first place, Dallas was second, and San Antonio was eighth. More residential building permits were issued in Dallas-Fort Worth last month than any other major metro, with 5,800 housing units authorized. Houston followed closely behind with 5,771, according to the U.S. Census Bureau. Meanwhile, San Antonio was 22nd in the country, with just over a thousand units.
With rapid building in North Texas and Houston, what makes San Antonio the country's hardest city for closing deals?
It's possible that San Antonio's high military population is driving the trend. Cancellations are common among buyers relying on Veterans Affairs loans, according to Redfin. In Military City, USA, these buyers make up a significant share of the market.
With sellers losing the advantage they've enjoyed for the past few years, it's more of a gamble for buyers to build equity during a brief ownership period -- a consideration that especially deters active service members, said Grant Lopez, president of Keller Williams San Antonio. First-time buyers who don't plan to stay in San Antonio for more than a couple of years increasingly doubt the value of buying rather than renting, Lopez said.
While the whole country suffers from a standoffish market, other Texas metros are more likely to attract wealthier buyers, Lopez speculated.
"We're not the sexy market of Austin and Houston and Dallas," Lopez said. "We don't have many of the super high-paying jobs; Dallas has a stronger employee market."
San Antonio may be susceptible to the same factors affecting markets around the country. In some cases, parties have canceled deals because they couldn't agree on repairs, or the buyer couldn't get financing, scenarios familiar in markets like Los Angeles and New York.