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Cash Sales Made Up 39 Percent of All Home Sales in January 2015

Share Fell by 2.6 Percentage Points Year Over Year

Molly Boesel    |    Housing Trends

Cash sales made up 38.9 percent of total home sales in January 2015, down from 41.4 percent in January 2014.  The year-over-year share has fallen each month since January 2013, making January 2015 the 25th consecutive month of declines. Month over month, the cash sales share increased by 3.2 percentage points, which is typical in the month of January. Due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis.

The cash sales share peak occurred in January 2011 when cash transactions made up 46.5 percent of total home sales in the U.S. 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 January 2015, the share should decrease to 25 percent in mid-2018.

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 January 2015 at 60 percent, followed by short sales (34.5 percent), re-sales (38.5 percent) and newly constructed homes (17.3 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 9.9 percent of all sales in January 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 home sales.

Cash Sales Share of Total Sales

Cash Sales Share of Total Sales

Figure 2 shows the cash sales share by state1 for January 2015. Florida had the largest share of any state at 56.3 percent, followed by Alabama (54.7 percent), New York (48.2 percent), Indiana (47.4 percent) and Missouri (47 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 65.6 percent, followed by Miami-Miami Beach-Kendall, Fla. (59 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (58.4 percent), Cape Coral-Fort Myers, Fla. (58 percent) and Fort Lauderdale-Pompano Beach-Deerfield Beach , Fla.(57.6 percent). Washington-Arlington-Alexandria, D.C.-Va.-Md. had the lowest cash sales share at 16.2 percent.

[1] Adequate data was not available for South Dakota and Vermont, and as such 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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