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At Current Rate of Decline, Cash Sales Share Should Reach Pre-Crisis Levels in 2017

Cash Sales Made Up 35 Percent of Total Home Sales in October 2014

Molly Boesel    |    Housing Trends

Cash sales made up 35.5 percent of total home sales in October 2014, down from 38.7 percent in October 2013. The year-over-year share has fallen each month since January 2013, making October the 22nd consecutive month of declines. Month over month, the cash sales share ticked up by half of a percentage point, as is typical for the fall and winter months. Due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis. The peak occurred in January 2011 when cash transactions made up 46.4 percent of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. At the current rate of year-over-year decrease, the cash sales share should be back to pre-crisis levels in 2017.

Figure 1 shows the historical trend in the cash sales share by sale type. Real estate owned (REO) sales had the largest cash sales share in October 2014 at 58.7 percent, followed by re-sales (35 percent), short sales (33 percent) and newly constructed homes (16.8 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 7.9 percent of total sales in October and, therefore, did not have a large influence on the overall cash sales share. In January 2011, when the cash sales share was at its peak, REO sales made up 23.9 percent of total sales.

Cash Sales Share of Total Sales

Cash Sales Share of Total Sales

Figure 2 shows the cash sales share by state for October 2014. Delaware had the largest share of any state at 58.3 percent, followed by Alabama (51.3 percent), Florida (51.1 percent), New York (44.4 percent) and Michigan (43.1 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)1 measured by population, Miami-Miami Beach-Kendall, Fla. had the highest share of cash sales at 56.6 percent, followed closely by West Palm Beach-Boca Raton-Delray Beach, Fla. (56.1 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (55.6 percent), Detroit-Dearborn-Livonia, Mich. (55.5 percent) and Cape Coral-Fort Myers, Fla. (55.2 percent). Washington-Arlington-Alexandria, D.C.-Va.-Md. had the lowest cash sales share at 16.0 percent.

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

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