📉 What the data shows

• Nationally, around 6 % of pending home-purchase contracts were canceled in May—up from 5 % a year earlier, marking the third straight month of annual increases MarketWatch+15Patch+15Reddit+15.

• In Redfin’s metro analysis for April 2025, Los Angeles saw 16.9 % of contracts fall apart, rising from 14.3 % a year prior Redfin+1Redfin+1.

• June cancellations soared to 14.9 % nationally—the highest since 2017—also with LA among the cities showing the biggest year-over-year jump Spectrum News 1.

🧩 Why this is happening in LA

1. Buyer’s Market—with More Inventory

   • There are more homes available, rocking the balance of power in favor of buyers. They can afford to be choosy—often walking away if inspections surface issues or a better option appears YouTube+9Spectrum News 1+9Spectrum Local News+9.

2. High Mortgage Rates are Squeezing Affordability

   • With typical 30‑year mortgage rates hovering around 6.5 – 7 %, funding a home has become costlier. Many buyers are backing out after reassessing their financial comfort zones Reddit+1MarketWatch+1.

3. Economic & Stock Market Nervousness

   • Broader instability—due to inflation fears, trade tensions, and market volatility—has made both everyday and high-end buyers more cautious. Indeed, luxury deals in California are falling apart amid portfolio losses Wall Street Journal+1Vanity Fair+1.

4. Wildfires & Insurance Issues

   • In early 2025, catastrophic wildfires (e.g., Palisades, Eaton) decimated parts of LA, impacting buyers’ willingness to proceed, and leading to legal adjustments so buyers can back out if unable to secure insurance en.wikipedia.org+11Redfin+11nypost.com+11.

💡 Implications

Impact AreaWhat It Means🔄 Resale StrategyThe increase in fallen-through deals gives negotiators leverage—repeat listings often sell at lower prices.🏚️ Pricing & ConditionClean, well-priced, and properly permitted homes still attract buyers; those with issues are steered away Redfin+1Redfin+1Reddit.🔍 Due-DiligenceInspections, appraisals, insurance quotes and loan approvals are becoming critical stages—more contracts are unraveling here.⚠️ Risk FactorsWildfires focus attention on insurance and long-term climate risk. Some policies can break deals.

✅ Bottom Line

Los Angeles is caught in a perfect storm of high rates, economic uncertainty, more listings, and climate/insurance risk—all converging to break more real estate contracts before they close. The result? A buyers’ market where hesitation is now mainstream.