CoreLogic: Slow Start for Cash Sales this Year

Cash sales continued to account for a significant portion of all home sales in April.  CoreLogic said on Wednesday that 31.6 percent of home sales that month were all cash, down 1.6 percentage points from March and 2.8 points from the previous April. For the first four months of this year cash sales made up fractionally more than a third of home sales, the lowest start for any year since 2008. 

Cash sales peaked in January 2011 when they accounted for 46.6 percent of all home sales.  At that point, 24 percent of home sales were from lender-owned inventories (REO) and a majority of those sales were cash.  Cash continues to dominate in the REO market, constituting 56.7 percent of those transactions in April 2016, but the REO share of sales has fallen to only 5.7 percent of the overall total.

Resales had the next highest cash sales share at 31.3 percent, followed by short sales at 28.6 percent and newly constructed homes at 14.5 percent. Resales typically make up the majority of home sales, totaling about 83 percent in April 2016, and therefore have the biggest impact on the total cash sales share.

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 April 2016, the share should return to pre-crisis levels by mid-2018.

Florida had the largest cash sales share of any state at 45.5 percent, followed by Alabama (45.3 percent), New York (44.2 percent), New Jersey (38.2 percent) and Indiana (38 percent). Of the nation's largest 100 Core Based Statistical Areas (CBSAs) measured by population, Philadelphia, had the highest cash sales share at 57.9 percent, followed by West Palm Beach-Boca Raton (54.4 percent), Cape Coral-Fort Myers (51.7 percent), North Port-Sarasota-Bradenton, Fla. (51.6 percent) and Detroit. (50.8 percent).