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Cash Shares In 2016 On Track To Be Lowest Since 2008

Cash Sales Accounted for 36 Percent of All Home Sales in February 2016

Molly Boesel    |    Housing Trends

Cash sales accounted for 35.7 percent of total home sales in February 2016, down 2.5 percentage points year over year from 38.1 percent in February 2015. On a month-over-month basis, the cash sales share increased by 0.1 percentage point in February 2016 compared with January 2015. For the first two months of 2016, the cash sales share averaged 35.6 percent, the lowest start to any year since 2008. The cash sales share peaked in January 2011 when cash transactions accounted for 46.6 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 February 2016, the share should hit 25 percent by mid-2018.

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 February 2016 at 59.2 percent. Resales had the next highest cash sales share at 35.6 percent, followed by short sales at 32.6 percent and newly constructed homes at 15.2 percent. While the percentage of REO sales that were all-cash transactions remained high, REO transactions accounted for only 7.8 percent of all sales in February 2016. 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 79 percent in February 2016), and therefore have the biggest impact on the total cash sales share.

Cash Sales

Cash Sales

Figure 2 shows the cash sales share by state[1] for February 2016. Alabama had the largest cash sales share of any state at 51.7 percent, followed by Florida (49.2 percent), New York (46.9 percent), Indiana (44.8 percent) and West Virginia (44.2 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)[2] measured by population, Philadelphia, Pa. had the highest cash sales share at 54.5 percent, followed by Detroit, Mich. (53.8 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (53.4 percent), Miami-Miami Beach-Kendall, Fla. (52.5 percent) and Cape Coral-Fort Myers, Fla. (51.8 percent). Syracuse, N.Y. had the lowest cash sales share at 11.5 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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