I've had this on and off since Patch 1.69.
It's a strange one to explain and I'm finding it impossible to capture it happening but I'll do my best to describe what happens in my game. So I've had it happen on Xbox Series S and then on my brand new Xbox Series X which I've been using for just a couple of weeks. It happens to any item in any category, whether it's decor or objects. I select an item, it's highlighted as selected then I go to place it but I hear that sound effect you get when you press Back. It's a kind of whoosh sound and the item is gone and it's no longer selected. I have to do it again and it works a second time.
I don't know if it's the same for everyone but that's as best as I can describe it. It behaves as if I've cancelled the action.
In other instances which may or may not be related I occasionally find that I've got a green or red outline instead but no item. My cursor just appears to be placing an invisible square. I did manage to get an image of that and it's attached. This has also happened on both consoles.