40% of All Home Sales Are Now Cash Deals

Home sales were up in July, and a large chunk of them were cash purchases, according to RealtyTrac’s July 2013 U.S. Residential & Foreclosure Sales Report.

Sales volume increased 11% from July 2012 to 5.5 million, a 4% increase from June. All-cash purchases, in which no loan is recorded at the time of sale, accounted for 40% of sales volume, up from 35% in June and 31% in July 2012.

But eight states saw annual decreases in total sales, and four of those states reported the largest annual increases in median home prices for July: California, Nevada, Arizona and Georgia.

In a news release, RealtyTrac Vice President Daren Blomquist highlighted some factors behind those numbers:

“Home prices are accelerating rapidly in these markets thanks to the combination of low supply and strong demand,” he 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.”

He added that rising interest rates may also explain the higher percentage of cash purchases, because some potential homeowners can no longer afford the mortgages they would need to buy.

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To that point, Los Angeles, Phoenix and Riverside-San Bernardino (California), topped the nation’s largest metro areas for month-over-month jumps in cash sales share, annual decreases in sales volume and year-over-year increases in median home prices.

Dallas posted the largest increase in cash sales from June with an 82% increase. St. Louis was next (up 66%), followed by Los Angeles (up 32%), Riverside-San Bernardino (up 26%), Seattle (up 21%) and Phoenix (21%).

Chicago, Minneapolis, Baltimore, Boston and Philadelphia saw the largest year-over-year increases in sales volume among the nation’s most-populated metropolitan areas tracked in the report. The largest sales-volume decreases were posted by San Francisco, Los Angeles, San Diego, Riverside-San Bernardino, Phoenix and Atlanta.

Image: iStockphoto