You are legally free to buy another home, because you are legally free to buy two homes at once if you are financially able. Your problem is trying to get a loan and coming up with deposit money when you are still tied up in another escrow. It is quite possible that you will have to go through at least mediation if not arbitration or litigation with the seller, who may counter sue you for specific performance. You don't specify what the breach of the contract is, but not all breaches of a purchase/sale contract allow you to cancel. You need to consult with an attorney about the details of your situation.

I assume the transaction is in escrow. The timing requirements may be governed by whether there is an effective 'time is of the essence' provision. In any event, a party that has fully performed has a right to cancel against a party that is in breach. Absent hiring your own lawyer to review the purchase agreement and escrow instructions and advise you, your best recourse is to ask the assigned escrow officer when (and whether) you may consider the purchase contract on this property terminated and when you'll receive your deposit back. I'd advise not making any new commitments until you have a cancellation and a release of deposit IN HAND.

You can do anything you like, but unless and until that escrow is closed by mutual agreement or court order, you are in a contract to buy that house. I don't suggest you enter yet another escrow until then. You need to resolve the situation, whether that means negotiation or litigation. If serious about hiring counsel to help and represent you, feel free to contact me. I've been dong real estate cases for a long time now.

I suggest you speak to an attorney. It sounds as though you are in breach, and may be subject to a lawsuit for breach of contract.