Last year we were seeing about 30% of contracts listed as "active/backup" fall out of contract and actually go back on the market. This can happen for appraisal, buyer's loan, inspection, or various other reason (buyer finds another house they like better).
This year, the market has improved; here are less homes for sale and more buyers and interest rates are at 3.5%. Only about 5-10% of homes are falling out of contract this year.
Backup offers are great for buyers and sellers - they are especially beneficial during a short sale.