Key Takeaways
- A Redfin analysis of home-sales data suggested that cash purchases were at a multiyear low last year.
- But some economists say the percentage of homes bought with cash may not fall much further unless mortgage rates fall.
- A typical 30-year mortgage rate was recently around 6.8%, lower than in recent months but well above pandemic lows.
Cash buyers make for a more competitive housing market. But while there are recent indications that fewer homes are being bought with cash than in past years, some experts don’t expect that to soften the market much.
About one-third of US home purchases in 2024 were made in cash, according to a recent report from real estate listing site Redfin. Redfin, which examined county-level home purchase records across 40 big metropolitan areas between 2014 and 2024, said that marked the lowest percentage of cash purchases since 2021.
That number, however, remains above pre-pandemic levels, Redfin said.
“When housing is expensive—like it is now—wealthier Americans who can afford to pay cash are more likely than lower-income Americans to be buying homes,” Redfin Senior Economist Sheharyar Bokhari said in the report. “We are unlikely to see the share of all-cash purchases fall much lower in 2025, unless mortgage rates drop enough to drive a significant increase in sales.”
A typical 30-year mortgage rate was recently around 6.8%, lower than in recent months but well above pandemic lows. Lower mortgage rates can make it less attractive to buy a home with cash.
Investors bought fewer homes in 2024 following a surge in purchases for things like home flips during the pandemic, which may have contributed to a lower overall number of cash puchases last year.
Cash buyers are often people who have been in their homes for a while, earning equity. They may also be moving from high-price locations to more affordable ones, according to Jessica Lautz, National Association of Realtors deputy chief economist and vice president of research, who said retirees, vacation home buyers and mom-and-pop investors are typical cash purchasers.