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Cash Sales Made up 40 Percent of Total Home Sales in February

Cash Sales Share Shows Clear Downward Year-Over-Year Trend

Molly Boesel    |    Housing Trends

Cash sales made up 40.2 percent of total home sales in February 2014, down from 43.7 percent the previous year and 40.8 percent the previous month. Cash sales share comparisons should be made on a year-over-year basis due to the seasonal nature of the housing market , and by that measurement, the trend in cash sales is clearly down. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. The peak occurred in January 2011, when cash transactions made up 46.2 percent of total home sales.

Figure 1 shows the historical trend in the cash sales share by sale type. Real-estate owned (REO) sales made up the largest portion of cash sales in February at 58.5 percent, followed by re-sales (40.2 percent), short sales (39 percent) and newly constructed homes (17 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 11.5 percent of total sales in February, and therefore did not have a large influence on the overall cash sales share.

Figure 2 shows the cash sales share by state for February 2014. Florida had the largest share of any state at 59.8 percent, followed by Alabama (55.3 percent), West Virginia (52.0 percent), New York (51.5 percent) and Michigan (48.6 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)[1] measured by population, Detroit-Livonia-Dearborn, Mich. had the highest share of cash sales at 68.1 percent, followed by Cape Coral-Fort Myers, Fla. (64.5 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (64.3 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (63.8 percent) and Miami-Miami Beach-Kendall, Fla. (62.8 percent).

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[1] The cash sales share for CBSAs listed in this report was calculated using cumulative sales from the past three months.