US Home Buyers Paying Cash

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With mortgage interest rates rising, 40 percent of all sales of residential property sales in the U.S. in July were all cash deals, according to a new report by RealtyTrac.

The number of cash deals is up from 35 percent of all sales in June and 31 percent from a year earlier. In Dallas the number of cash deals was up 82 percent from June; in St. Louis the volume was up 66 percent, with Los Angeles, Seattle and Phoenix also posting double-digit increases.

The volume of cash deals indicates "there is still strong demand," Daren Blomquist, vice president at RealtyTrac, wrote in the report. "The recent uptick in interest rates could also be contributing to a higher percentage of cash purchases as some non-cash buyers can no longer afford to buy, particularly in high-priced markets."

Overall home sales in the U.S. jumped 11 percent in July from a year earlier and 4 percent from June, despite rising interest rates, according to a report released today by RealtyTrac. But eight states recorded annual decreases, including California, Arizona and Nevada, which have seen some of the largest price increases in the last year.

The latest data from the National Association of Realtors showed sales increased 6.5 percent in July from June, while the median price was up 13.7 percent from a year ago.

"Home prices are accelerating rapidly in these markets thanks to the combination of low supply and strong demand," Mr. Blomquist said. "However, counter to the national trend, sales volume in these markets is down even as the percentage of cash sales rises, indicating there is still strong demand but that buyers who need financing to purchase are increasingly left out in the cold."
 
Other details from the report:

• Short sales (where the sale price is below the combined total of outstanding mortgages secured by the property) accounted for 14 percent of all residential sales in July, up from 13 percent in June and up from 9 percent in July 2012. States with the highest percentage of short sales in July included Nevada (35 percent), Florida (30 percent), Maryland (20 percent), Washington (19 percent), and Tennessee (19 percent).

• Institutional investor purchases (sales to non-lending entities that purchased at least 10 properties in the last 12 months) accounted for 9 percent of all residential sales in July, the same percentage as in the previous month and also the same percentage as in July 2012. Metro areas with the highest percentage of institutional investor purchases included Atlanta (25 percent), Tampa (22 percent), Palm Bay, Fla., (20 percent), Greenville, S.C. (19 percent), and Charlotte, N.C. (19 percent).

• Sales of bank-owned properties (REO) accounted for 9 percent of all residential sales in July, also the same percentage as the previous month and a year ago. Metro areas with the highest percentages of REO sales included Detroit (26 percent), Modesto, Calif. (25 percent), Stockton, Calif., (24 percent), Las Vegas (24 percent), and Cleveland (20 percent).

• Among 20 of the nation's largest metro areas with annual sales estimates tracked in the report, the biggest year-over-year decreases in sales volume were in San Francisco (down 20 percent), Los Angeles (down 20 percent), San Diego (down 19 percent), Riverside-San Bernardino (down 14 percent), Phoenix (down 13 percent), and Atlanta (down 8 percent).

• Among 20 of the nation's largest metro areas with annual sales estimates tracked in the report, the biggest year-over-year increases in sales volume were in Chicago (up 27 percent), Minneapolis (up 23 percent), Baltimore (up 21 percent), Boston (up 20 percent), and Philadelphia (up 20 percent).

• Major metro areas where median residential property prices increased 20 percent or more from a year ago in July included Los Angeles (up 29 percent), Atlanta (up 24 percent), San Francisco (up 35 percent), Riverside-San Bernardino (up 26 percent), and Phoenix (up 25 percent).