Up from 30.7% a year ago, 33.4% of home purchases in April were made in cash. The share is comparable with February’s 33.5%, which was the highest level since 2014, according to a new Redfin report.
Additionally, the share of home buyers using Federal Housing Administration (FHA) loans hit its highest rate,16.4%, since February 2020—up from 10.4% in 2022.
High mortgage rates could be responsible for the increase in cash buyers, the report suggests. “A home buyer who can afford to pay in all cash is weighing two potential paths,” says Sheharyar Bokhari, Redfin senior economist. “They can use cash to pay for the home and avoid high monthly interest payments or take out a loan and pay a high mortgage rate. In that case, they could use the money that would have gone toward an all-cash purchase to invest in other assets that offer bigger returns, which could partly cancel out their high mortgage rate.”Read More