First time buyers, in particular, are uncertain of the unknown. If they have limited funds to begin with, and are stretching to have enough money for down payment and closing costs, they find it difficult to think about forking over more dollars for repairs.
Concurrently, if the buyers were applying for the loan, and the appraisal came in at less than what they're offering, they may also back out after viewing the inspections, without attempting to negotiate a lower contract. Lower value, higher/unexpected repair costs may sour them on the deal.
Or maybe, they also didn't qualify for the loan.
So just buckle up, put the property back on the market. At this time, it's still a seller's market. There are enough buyers out there who may not be swayed.
Incidentally, you have a right, as the seller, to copies of those disclosures especially now that they are considered material facts that need to be disclosed to the next buyer.
The advantage to you, and to potential buyers is that with these inspections, there are no/fewer surprises as to the condition of the house. The next buyer will go in the deal with eyes wide open.
The reasons are actually endless.
Smart sellers understand this going into a transaction and also understand that if a buyer really wants out (regardless of the reason), there is almost no way to keep them in contract. It's best to let them go and move on to a more dedicated buyer - and in this market, there is no end of those.
As Carl said, it is best to move on to a more committed buyer. In the current market, you should not have trouble finding one.
Because of the risk of the unknown, I generally recommend to my sellers that they have the home inspected PRIOR to putting on the market. This way, any defects can be disclosed upfront, precluding any nasty surprises a buyer may find. It also helps prevent 'frivolous cancellations' of contract due to property inspections.
In addition, perhaps the buyer's financing fell through (or they simply failed to qualify for the loan). Or maybe the home didn't appraise at the contract value (or close to it).
I hate to say it as well; and I too have seen it happen often: the buyer cancels one contract as he had an offer accepted on yet another home. Highly unethical, but nevertheless, it happens.
Good luck with your sale!