SEATTLE–A growing share of homebuyers are more inclined to pay all-cash as they look to avoid high payments with mortgage rates still hovering above the 6% mark, according to a new analysis.
Redfin said it recently examined nationwide home sales, and found that 28.8% of U.S. homebuyers paid in all-cash in August, down just incrementally from 29% year-over-year. The prevalence of all-cash payments peaked at nearly 35% in late 2023 and early 2024 because mortgage rates peaked in the high-7% range during that time, according to Redfin.
“When mortgage rates fell from that peak, all-cash payments became less common, as lower rates meant lower interest payments,” Redfin stated. “Another reason the share of buyers paying in cash has declined from its peak: this past summer was the strongest buyer’s market in over a decade, and a less competitive market means fewer buyers have to pay cash to beat out other bidders.”
Basically ‘Unchanged’
According to Redfin, while the share of buyers paying cash has declined from its high point, it is essentially unchanged from last year largely because mortgage rates were sitting between 6.5% and 6.6% in August, mostly flat from a year before, keeping interest payments the same.
“The lack of all-cash buyers can be good news for house hunters who do not have the means to purchase a home without a loan, especially when paired with the fact that buyers in most markets hold negotiating power,” Redfin said. “Now that rates have declined a bit more to a weekly average of 6.27%, all-cash purchases may become even less common.”
