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Cash Sales Update: May 2016

Cash Sales Accounted for 30 Percent of All Home Sales in May

Molly Boesel    |    Housing Trends

Cash sales accounted for 30 percent of total home sales in May 2016, down 2.5 percentage points year over year from May 2015. On a month-over-month basis, the cash sales share fell by 1.7 percentage points in May 2016 compared with April 2016. For the first five months of 2016, the cash sales share averaged 33 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 May 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 May 2016 at 56.6 percent. Resales had the next highest cash sales share at 29.8 percent, followed by short sales at 27.9 percent and newly constructed homes at 14.6 percent. While the percentage of REO sales within the all-cash category remained high, REO transactions accounted for only 5.1 percent of all home sales in May 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, totaling about 83 percent in May 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 May 2016. Alabama had the largest cash sales share of any state at 45.2 percent, followed by New York (45.1 percent), Florida (42.4 percent), New Jersey (36.4 percent) and Indiana (36 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)[2] measured by population, Detroit-Dearborn-Livonia, Mich. had the highest cash sales share at 53.4 percent, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (52.3 percent), Philadelphia, Pa. (52 percent), North Port-Sarasota-Bradenton, Fla. (50.3 percent) and Cape Coral-Fort Myers, Fla. (49.3 percent). Syracuse, N.Y. had the lowest cash sales share at 13.7 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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