Cash Sales in the U.S. Continue to Decline

Home sales paid in cash in the United States fell in May for the 29th consecutive month. According to a report by data provider CoreLogic, the share of all-cash transactions was 31.9% of total home sales in May 2015 compared with 35.1% a year before. The year-over-year share has fallen each month since January 2013. At its peak in January 2011, cash sales made up 46.5% of total home sales. The main reason behind these results is a decline in distressed sales, which are mostly all-cash, explained Frank Nothaft, CoreLogic's chief economist. Back in January 2011, banked owned transactions made up almost 24% of all sales. As of May 2015, they accounted for only 6% of sales nationwide, he said. Florida had the largest share of cash sales of any state at 47.8%, followed by New York and New Jersey, with 45.8% each. The U.S. housing crisis was particularly acute in these three states—home values in Florida are on average 30% less today from their peak—and foreclosure proceedings there take longer than in the rest of the country, said Nothaft. A minor factor in all-cash sales figures is a small decline in foreign buyers, who made up 2% of all homebuyers in the U.S. in the first five months of 2015, down 2.5% from the same period in 2014. Florida is the top market for foreigner buyers in the U.S., and most international buyers pay in cash, according to the National Association of Realtors. CoreLogic, based in California, estimates that if the share of cash sales continues to fall at the same rate it did in May 2015, the share should hit 25% by mid-2017, the average seen prior to the housing crisis. Follow Mansion Global on Facebook, Twitter and Instagram Write to us at info@mansionglobal.com