Cash sales fall to a third of the home market

The following is from a CoreLogic news release:

Cash sales made up 33 percent of total home sales in June 2014, the lowest share since September 2008 (considered the unofficial start of the financial crisis), and down from 36.3 percent in June 2013. While the cash sales share also fell month over month from the 34.4 percent reported in May 2014, cash sales share comparisons should be made on a year-over-year basis due to the seasonal nature of the housing market. The share has fallen year over year each month since January 2013. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. The peak occurred in January 2011, when cash transactions made up 46.2 percent of total home sales.

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 June at 55.3 percent, followed by re-sales (32.5 percent), short sales (31.8 percent) and newly constructed homes (16.2 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 7.2 percent of total sales in June and, therefore, did not have a large influence on the overall cash sales share. In January 2011, when the cash sales share was at its peak, REO sales made up 24 percent of total sales.

Figure 2 shows the cash sales share by state for June 2014. Florida had the largest share of any state at 50.9 percent, followed by Alabama (48.1 percent), New York (44.6 percent), Kentucky (40.1 percent) and Nevada (40 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)1 measured by population, Cape Coral-Fort Myers, Fla. had the highest share of cash sales at 61.2 percent, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (60.6 percent), North Port-Sarasota-Bradenton, Fla. (59.8 percent), Miami-Miami Beach-Kendall, Fla. (58.7 percent) and Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. 58.5 percent). Washington-Arlington-Alexandria, D.C.-Va.-Md had the lowest cash sales share at 15.6 percent.

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