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Cash Sales On Track to Reach Pre-Crisis Level by Mid-2017

Cash Sales Accounted for 32 Percent of All Home Sales in August 2015

Molly Boesel    |    Housing Trends

Cash sales accounted for 31.7 percent of total home sales in August 2015, down from 34.9 percent in August 2014. On a month-over-month basis, the cash sales share increased by 0.8 percentage points in August 2015 compared with July 2015. The cash sales share typically increases month over month in August, but due to seasonality in the housing market, cash sales share comparisons should be made primarily on a year-over-year basis.
The cash sales share peaked in January 2011 when cash transactions accounted for 46.5 percent of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in August 2015, the share should hit 25 percent by mid-2017.

Figure 1 shows the historical trend in cash sales share by sale type. Real estate-owned (REO) sales had the largest cash sales share in August 2015 at 57.9 percent. Resales had the next highest cash sales share at 31.1 percent, followed by short sales at 29 percent and newly constructed homes at 15.5 percent. While the percentage of REO sales that were all-cash transactions remained high, REO transactions accounted for only 6 percent of all sales in August 2015. In January 2011 when the cash sales share was at its peak, REO sales represented 23.9 percent of total home sales. Resales typically make up the majority of home sales (about 82 percent in August 2015), and therefore have the biggest impact on the total cash sales share.

Figure 2 shows the cash sales share by state1 for August 2015. Alabama had the largest share of any state at 47.5 percent, followed by Florida (45.2 percent), New York (42.4 percent), West Virginia (39.6 percent) and Missouri (39.5 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)2 measured by population, Miami-Miami Beach-Kendall, Fla. had the highest cash sales share at 51.7 percent, followed by Philadelphia, Pa. (51 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (50.8 percent), North Port-Sarasota-Bradenton, Fla. (48.5 percent) and Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (47.7 percent). Washington-Arlington-Alexandria, D.C.-Va.-Md. had the lowest cash sales share at 13.6 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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