Cash Sales Accounted for 34 Percent of All Home Sales in 2015
Irvine, Ca-based CoreLogic is reporting this week that cash sales accounted for 33.4 percent of total home sales in December 2015 and 33.9 percent of total home sales for the full year 2015. The full year 2015 cash sales share was the lowest since 2008.
The December 2015 cash sales share was down 3.3 percentage points year over year from 36.7 percent in December 2014. On a month-over-month basis, the cash sales share fell by 2.8 percentage points in December 2015 compared with November 2015. The month over month decrease in the cash sales share was larger than normal for the month of December, indicating that the elevated share reported for November, which was attributed to the new federal mortgage rules (TRID), was temporary.
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 December 2015, the share should hit 25 percent by mid-2017.
Real estate-owned (REO) sales had the largest cash sales share in December 2015 at 59.2 percent. Resales had the next highest cash sales share at 33.4 percent, followed by short sales at 30.9 percent and newly constructed homes at 15.4 percent. While the percentage of REO sales that were all-cash transactions remained high, REO transactions accounted for only 6.9 percent of all sales in December 2015. 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 December 2015), and therefore have the biggest impact on the total cash sales share.
Delaware had the largest cash sales share of any state at 57 percent, followed by Alabama (50.1 percent), New York (46.5 percent), Florida (46.3 percent) and Mississippi (45 percent). Of the nation's largest 100 Core Based Statistical Areas (CBSAs) measured by population, Detroit, Mich. had the highest cash sales share at 62.7 percent, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (53.4 percent), Miami-Miami Beach-Kendall, Fla. (53.2 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (51.2 percent) and North Port-Sarasota-Bradenton, Fla. (51 percent). Syracuse, N.Y. had the lowest cash sales share at 12.5 percent.