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Cash Transactions Made Up 35 Percent of All Home Sales in December 2014

Full Year 2014 Cash Sales Share was 2.8 Percentage Points Lower than Full Year 2013

Molly Boesel    |    Housing Trends

Cash sales made up 35.5 percent of total home sales in December 2014, down from 38.5 percent in December 2013. The year-over-year share has fallen each month since January 2013, making December the 24th consecutive month of declines. Month over month, the cash sales share fell by half of a percentage point. 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 46.5 percent of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. Should the cash sales share continue to fall at the same rate that it did in December 2014, the share should reach 25 percent in mid-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 December 2014 at 58.4 percent, followed by re-sales (35.4 percent), short sales (32.7 percent) and newly constructed homes (15.6 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 8.8 percent of all sales in December and, therefore, had a small 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 state1 for December 2014. Alabama had the largest share of any state at 52.2 percent, followed by Florida (50.3 percent), New York (45.9 percent), Michigan (44.6 percent) and Idaho (42.9 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)2 measured by population, Detroit-Dearborn-Livonia, Mich. had the highest share of cash sales at 65.9 percent, followed by Miami-Miami Beach-Kendall, Fla. (58.3 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (57.2 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (56.3 percent) and Cape Coral-Fort Myers, Fla.(55.6 percent). Syracuse, N.Y. had the lowest cash sales share at 15 percent.

[1] Data was thin in South Dakota and Vermont, and therefore cash sales shares are not reported for these states.
[2] The cash sales share for CBSAs listed in this report was calculated using cumulative sales from the past three months.

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