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Cash Sales Share Fell Sharply in March

Cash Sales Accounted for 33 Percent of All Home Sales

Molly Boesel    |    Housing Trends

Cash sales accounted for 33 percent of total home sales in March 2016, down 2.4 percentage points year over year from March 2015. On a month-over-month basis, the cash sales share fell by 2.8 percentage points in March 2016 compared with February 2016. For the first three months of 2016, the cash sales share averaged 34.7 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 March 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 March 2016 at 57.2 percent. Resales had the next highest cash sales share at 32.9 percent, followed by short sales at 30.6 percent and newly constructed homes at 14.4 percent. While the percentage of REO sales that were all-cash transactions remained high, REO transactions accounted for only 6.8 percent of all sales in March 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 80 percent in March 2016), and therefore have the biggest impact on the total cash sales share.

Cash Sales Map

Cash Sales Map

Figure 2 shows the cash sales share by state[1] for March 2016. Alabama had the largest cash sales share of any state at 49.8 percent, followed by New York (47.5 percent), Florida (45.9 percent), Michigan (41.8 percent) and Indiana (41 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 55.7 percent, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (54.4 percent), Cape Coral-Fort Myers, Fla. (52.6 percent), North Port-Sarasota-Bradenton, Fla. (51.6 percent) and Miami-Miami Beach-Kendall, Fla. (51.4 percent). Syracuse, N.Y. had the lowest cash sales share at 11.7 percent.

1 Adequate data was not available for South Dakota, Vermont and West Virginia, 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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