All-Cash Home Purchases Hit 3-Year Low: Report

Four of the top five metros with the highest share of such home purchases last year were in Florida.

A home advertised for sale in a residential neighborhood in San Jose, Calif., on Aug. 15, 2024. Loren Elliott/Getty Images

The share of buyers purchasing properties by paying fully in cash dipped year-on-year in the United States as investors bought fewer properties amid high prices and mortgage rates, according to real estate brokerage Redfin. Investors make up a significant portion of buyers making such deals.

Redfin said cash buys made up just over 32 percent of home purchases in 2024, down from about 35 percent in 2023.

“The number of all-cash home sales dropped to its lowest level in at least a decade in 2024 as total home sales fell to historic lows,” the company said in a Feb. 18 statement.

Because investors account for a sizable chunk of buyers engaging in cash purchases, their interest level impacts the proportion of these deals. Investor interest is declining, as it is harder now to buy homes and sell them for big profits. Elevated home prices and loan costs are making buy-and-flip tactics less appealing.

For instance, the average sales price of homes sold in the United States in the first quarter of 2020 was $383,000, according to data from the Federal Reserve Bank of St. Louis. This jumped over 30 percent to $499,300 in the first quarter of 2022.

However, since then, home prices have not made any large movements, rising by just 2.2 percent to $510,300 as of the fourth quarter of 2024. The slowdown in sales price growth makes properties less attractive to investors.

Elevated mortgage rates, which impact potential subsequent buyers of the homes purchased for cash, pose another challenge. The average weekly rate on a 30-year fixed-rate mortgage has remained above 6 percent for more than two years.

Even though the share of all-cash sales in 2024 was down on an annual basis, such sales still made up a “bigger piece of the homebuying pie than before the pandemic, when the share ranged from 25 percent to 30 percent,” the brokerage said.

Redfin senior economist Sheharyar Bokhari attributed the elevated all-cash sales rate to purchases made by wealthier Americans. When homes are expensive, as is the case now, wealthy individuals who can afford to pay in cash are relatively more likely to buy properties compared to lower income groups, he said.

Bokhari does not expect the share of all-cash purchases to change much this year. The only exception would be if mortgage rates tumble to a low enough level to trigger “a significant increase in sales.”

Out of the 40 metros tracked by the brokerage, West Palm Beach, with 49.6 percent, recorded the highest share of all-cash home purchases last year.

This was followed by Jacksonville, Cleveland, Fort Lauderdale, and Miami. Except for Cleveland, the remaining four metros are in Florida.

Rise in Prices

In January, home prices rose by 0.6 percent on a monthly basis and 5.4 percent on an annual basis, with the annual jump being the slowest pace since August 2023, according to Redfin.

“Price growth in January mainly relates to homes that went under contract in December. Since then we have seen a slowdown in sales, along with an uptick in homes being listed,” Bokhari said.

“That’s likely to lead to slightly slower price growth moving forward because not only are homes sitting longer on the market, when they do go under contract, they are selling at nearly 2 percent under list price—the biggest discount in nearly two years.”

As for mortgage rates, the weekly rate for the 30-year fixed rate mortgage has declined for five straight weeks but continues to hover near the 7 percent level.

A key factor that could influence the trajectory of mortgage rates is the U.S. Federal Reserve and its decisions regarding interest rate cuts. In December 2024, the agency said there would be fewer rate cuts this year.

During the Federal Open Market Committee meeting in January, officials kept interest rates unchanged.

According to a Feb. 19 post by real estate marketplace Zillow, prospective homebuyers also seem to be “adopting the Fed’s ‘wait-and-see’ approach,” Zillow said. “Homes are taking longer to sell, and sellers are increasingly resorting to price cuts to close deals.

“On a positive note, buyers who can afford homes at today’s interest rates may find they have more time to consider their options and greater leverage in negotiations.”