Cash Sales Soar to Post-Recession High

Cash sales accounted for 8 percent of new-home sales in the fourth quarter of 2017, matching a high that has not been seen since 2014, the National Association of Home Builders reports on its Eye on Housing blog. Cash sales make up an even larger share of existing-home sales—about 20 percent in December, according to the National Association of REALTORS®.

Cash hardly makes up the bulk of financing options for buyers, however. The share of new homes financed with conventional mortgages has dropped slightly from 73.2 percent to 72.7 percent. In the fourth quarter of 2017, 12.9 percent of new-home buyers used FHA loans. The share of sales financed with FHA-backed mortgages has dropped 4 percentage points since reaching a peak in the second quarter of 2015.

Source: “Cash Sales Tie Post-Recession High,” National Association of Home Builders’ Eye on Housing blog (Jan. 26, 2018)

Home Buyers Facing Less Competition From Cash Buyers

The percentage of cash sales fell to 33 percent of total home sales in June, marking the lowest share since September 2008, CoreLogic reports. A year ago, cash sales stood at 36.3 percent of the market; they have been falling steadily since January 2013.

Historically, cash sales make up about 25 percent of total home sales, according to data prior to the housing crisis. In 2011, cash sales peaked at 46.2 percent of sales nationwide, CoreLogic reports.

Buyers are using cash mostly to purchase real estate–owned properties, or REOs. Fifty-five percent of REOs are all-cash transactions, followed by nearly 33 percent of resales, about 32 percent of short sales, and 16 percent of newly built homes.

Source: “Cash Sales Accounted for One in Three Home Sales in June,” HousingWire (Sept. 9, 2014)