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All-Cash Sales Slowly Waning; Florida Continues to Lead

money-houseThe share of cash transactions for homes fell to less than 40 percent in March, signaling a possible return in traditional homebuying activity as the spring season got underway.

For March, CoreLogic reports cash sales accounted for 38.7 percent of total home sales, down from 40.2 percent the prior month and 41 percent a year before. Due to the seasonal nature of the housing market, CoreLogic senior economist Molly Boesel said the year-over-year comparison provides a better picture of the decline in cash sales.

While cash purchasing did fall, the cash sales share of total sales remains elevated compared to where it was prior to the housing crisis: 25 percent.

Historically, cash sales have typically been the territory of investors who can bring that kind of money to table, but as financing becomes more of a hassle, studies suggest more average American homebuyers are paying cash to ease the process and avoid delays in a competitive market. According to a recent study released by Campbell and Inside Mortgage Finance, an estimated 26.2 percent of March purchases by current homeowners were made with cash, based on a three-month moving average.

Examining its own numbers, CoreLogic reports REO sales made up the largest cash share of March sales at 57.2 percent, followed by re-sales (38.6 percent), short sales (36.2 percent), and newly built homes (17.2 percent).

However, Boesel said, "While the percentage of REO sales that were cash transactions remained high, REO transactions made up only 10.3 percent of total sales in March and therefore did not have a large influence on the overall cash sales share."

At the state level, Florida remained the leader in cash activity, with 57.4 percent of March transactions done with cash. Following the Sunshine State were New York (56.5 percent), Alabama (53.4 percent), Kansas (48.8 percent), and West Virginia (47 percent).

Though Florida had the highest share of cash sales, among the 100 largest core-based statistical areas, Detroit reigned with a share of 68.3 percent.

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