The Washington Post has this on cancellations. "As the housing market cools, builders are reporting that more people are walking away from contracts and from tens of thousands of dollars in deposits. Wall Street analysts say the Washington market is among those seeing the highest percentages of buyers abandoning ship, more than double last year's rate, and perhaps as high as one in three new-home buyers in some places."

"And nationally, some big builders are beginning to report cancellation rates upward of 25 percent. A home-building research firm, this week said that its latest survey of builders showed that the cancellation rate for the Washington area in March more than doubled from a year earlier."

"The survey shows the cancellation rate locally highest in Fairfax County, at 30.9 percent, compared with 0.8 percent a year ago. Half of condominium buyers there canceled, compared with no cancellations a year ago."

"People who are buying for investments rather than residences are the most likely to bail out, experts said. They reason that it would be better to lose a deposit than to go ahead with an investment that could lose value, particularly if builders are cutting prices in the same or nearby projects."

"Typically, buyers of new homes pay upfront deposits calculated either as flat amounts as low as $1,000 or as a percentage of the price, generally about 5 percent of the home price. Despite the pain of giving up that much money, some buyers are canceling to cut their losses because builders are pricing the same houses for so much less, Alexandria lawyer James Brincefield Jr. said."

"'I have seen people literally walk away from $125,000 deposits rather than go forward with the closing because the value of a house identical to their own was being sold by the builder for $100,000 less,' said Brincefield, who is preparing litigation for buyers who want to sue builders to get their deposits back."

"And builders are trying to make it harder for people to split, lawyers and real estate agents said. 'It's getting really kind of scary right now because builders are waving their sabers,' said Christine Cormack, broker in Ashburn and a real estate investor. 'They're holding people to contracts.' That can include going to court to force closings.'"

"Hanley Wood's survey showed the Sacramento area with the highest cancellation rate, 28 percent, up from 2.6 percent in March 2005. Rates in Las Vegas, Denver, Phoenix and Orange County, Calif., also were higher than those in the Washington area"

"While some deals may have turned sour for the original buyers, that can be heartening to those looking for bargains. Builders are offering more incentives to buy, including price cuts and free upgrades."