I would give him his money back minus the fee it costs me to re-list the wheels. You do not know his situation and sometimes doing the right thing is doing the best thing if it doesn't hurt you much if at all.
It is too bad he backed out but I mean...he could have backed out because of a family emergency or something along those lines. I personally had to back out of a deal that I put a deposit on because I had to bail a friend out of jail. My friend wasn't able to pay me back on the spot but all the money I had in the bank for the purchase was spent on his bail. The guy selling refunded my deposit and I without having to, tried to compensate him by letting him keep $40 to cover re-listing fees and a little compensation for his inconvenience.
