Homes Purchased With Cash Declined in December but Remain Near Record Highs

Redfin is reporting that 31.2% of US home purchases in December 2022 were paid for with all cash. That is up from 28.8% a year ago but down from the eight-year high of 31.9% in November 2022.

According to Redfin, the share of homes bought with cash elevated above pre-pandemic levels because mortgage rates are high, averaging 6.36% in December. Buyers who can afford to pay cash are motivated because it means avoid paying high interest on a loan. The typical monthly mortgage payment is up by approximately 25% year-over-year. A year ago, the mortgage rate was close to 4%. However, mortgage rates and monthly mortgage payments have declined since November.

Adding additional background and analysis to the report, Dr. Sheharyar Bokhari, Redfin’s Senior Economist, said:

“Buyers are successfully using FHA loans more often now because sellers are eager to jump on any offer they get when their home sits on the market and gets just one or two showings a week. That means buyers with less money in the bank are finally able to win homes. But it’s not all good news for FHA buyers: Their loans are getting accepted because the market is slow, and the market is slow because high rates and prices make it unaffordable for a lot of people.”