Cash Transactions Made Up 36 Percent of All Home Sales in November 2014

13Feb 2015 by Woolhouse

Michigan Had the Highest Cash Sales Share of Any State in November

Source: CoreLogic

Molly Boesel    |    Housing Trends

Cash sales made up 36.1 percent of total home sales in November 2014, down from 38.8 percent in November 2013. The year-over-year share has fallen each month since January 2013, making November the 23rd consecutive month of declines. Month over month, the cash sales share ticked up by half of a percentage point, as is typical for the fall and winter months. Due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis. The peak occurred in January 2011 when cash transactions made up 46.4 percent of total home sales. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent.

Figure 1 shows the historical trend in the cash sales share by sale type. Real estate owned (REO) sales had the largest cash sales share in November 2014 at 61.1 percent, followed by re-sales (35.2 percent), short sales (32.7 percent) and newly constructed homes (16.3 percent). While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 10 percent of total sales in November and, therefore, had a small influence on the overall cash sales share. In January 2011, when the cash sales share was at its peak, REO sales made up 23.9 percent of total sales.

Figure 2 shows the cash sales share by state for November 2014. Michigan had the largest share of any state at 54.4 percent, followed by West Virginia (53.3 percent), Florida (51.4 percent), Alabama (50.7 percent) and South Dakota (45.5 percent). Of the nation’s largest 100 Core Based Statistical Areas (CBSAs)1 measured by population, Detroit-Dearborn-Livonia, Mich. had the highest share of cash sales at 63.2 percent, followed by Miami-Miami Beach-Kendall, Fla. (58.2 percent), West Palm Beach-Boca Raton-Delray Beach, Fla. (57.3 percent), Philadelphia, Pa. (55.9 percent) and Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (55.7 percent). Washington-Arlington-Alexandria, D.C.-Va.-Md. had the lowest cash sales share at 15.8 percent.

[1] The cash sales share for CBSAs listed in this report was calculated using cumulative sales from the past three months.