Cash Sales Continue to Decline in U.S.

As homebuyers use more credit to pay for their purchases, the share of cash sales in the United States could hit pre-crisis levels by mid 2017, according to new data. CoreLogic, a property information provider based in California, said that cash sales accounted for 33.7% of total home sales in April 2015, down from 37.4% a year before and much lower than the January 2011 peak of 46.5%. April 2015 marked the 28th consecutive month of declines. “If the cash sales share continues to fall at the same rate it did in April 2015, the share should hit 25% by mid 2017,” says the report. More: The Drawback of a Strong Dollar Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25%, said CoreLogic. “The cash share of home sales continues to decrease due to decreases in investor activity and decreases in distressed sales,” Molly Boesel, senior economist at CoreLogic, told Mansion Global. Distressed sales are real estate-owned (REO) sales---property owned by a lender after an unsuccessful sale at a foreclosure auction---and short sales. In April 2015, distressed sales accounted for 11.1% of total transactions nationwide, down 3% from April 2014 and the lowest rate for that month since 2007. At its peak in January 2009, distressed sales made up 32.4% of all sales in the U.S. Before the housing crisis, the share of those deals was traditionally about 2%, according to CoreLogic. If the trend continues downward, the share of distressed sales could go back to that “normal” level in mid-2017. International buyers of U.S. real estate tend to pay in cash. According to the National Association of Realtors, about 55% of transactions involving foreign buyers were all-cash in the 12 months ending March 2015. Florida, which accounts for 21% of all home sales to foreign buyers, more than any other state in the country, also recorded the largest share nationwide of cash sales in April 2015, with 51.4%.