The share of cash sales appears to be holding fairly
steady, even as investors pull back from the residential market (NAR put the
investor share of sales at 12 percent in November) and sales of owned real
estate (REO) and short sales decrease to low single-digit levels.
CoreLogic reports that the share of home sale
transactions that were all cash in September was 31.7 percent. This is only a
1.3 percentage point decrease from September 2015 and, at that rate of decline,
CoreLogic now estimates the cash share will return to the pre-crash average
rate of 25 percent by mid-2019. Cash
sales peaked in January 2011 at 46.6 percent.
Only 4.7 percent of home sales were from REO
inventories in September, but 59.4 percent of those sales were all cash. Sales of existing homes (resales) had a 31.7
percent cash share while short sales, representing 2.7 percent of sales, had a
cash share of 31.2 percent. The cash
sales share for newly constructed homes was 15.5 percent.
7.3 percent of all sales that were accounted for by REO and short sales was 2.8
percentage points below the share in September 2015, and were the lowest share
for any month since September 2007. At
its peak in January 2009, distressed sales totaled 32.4 percent of all sales
with REO sales representing 27.9 percent. The pre-crisis share of distressed
sales was traditionally about 2 percent. If the current year-over-year decrease
in the distressed sales share continues, it will reach that “normal”
2-percent mark in mid-2018.
All but nine states recorded lower
distressed sales shares in September 2016 compared with a year earlier.
Maryland had the largest share of distressed sales of any state at 18.9 percent
in September 2016, followed by Connecticut (18.4 percent), Michigan (17.6
percent), New Jersey (15.9 percent) and Illinois (15.1 percent).
Figure 3 shows the cash sales share
by state for September 2016. Alabama had the largest cash sales share of any
state at 47.6 percent, followed by West Virginia (45.8 percent), New York (45.3
percent), Florida (41.6 percent) and Indiana (40.9 percent).