BAM’s Key Details

  • A new Redfin report puts the percentage of home sales with all cash purchases at its highest level since 2014
  • 14.6% of mortgaged home sales used an FHA loan, the highest share in almost two 
  • The share using VA loans rose to 6.9% — the highest in over two years

Nearly a third (31.9%) of home sales in the U.S. were made with all-cash purchases in October. And according to a new Redfin report, that percentage is up from 29.9% a year ago and sitting at its highest level since 2014. 


Source: Redfin

All-cash offers increased the most in Riverside, CA, and were most prevalent in Florida. 

Meanwhile, the report offers some good news for borrowers with FHA and VA loans, with roughly one in seven mortgage home sales using an FHA loan and 6.9% using a VA loan. 

So, how are these findings related? And what does it mean for your clients?

Same, but for different reasons

The percentage of home sales that were all-cash purchases rose sharply at the start of 2021 after hitting a record low of 20.1% in April 2020. That percentage has gone up since then. 

But the factors behind all cash purchases now differ from those during the pandemic frenzy. 

Today’s affluent homebuyers are motivated to pay in cash because the surge in mortgage rates makes them want to avoid loans—and the high monthly interest payments that come with them—altogether. Mortgage rates have declined in recent weeks but are still hovering above 6%. During the pandemic housing boom, buyers were incentivized to pay in cash because of low rates, which drove up competition and made all-cash offers an effective bargaining chip for those who could afford them.

Chen Zhao

Redfin Economics Research Lead

All-cash purchases were most prevalent in Florida

From October 2021 to October 2022, all-cash home purchases increased in 29 of the 39 metros analyzed in Redfin’s study. 

Riverside, CA, saw the biggest increase, with the share of home sales rising to 38% from 19.2%. 

Metros with the biggest increase in all-cash purchases were:

  • Riverside, CA, with the share of home sales rising from 19.2% to 38% 
  • Cleveland: from 32% to 47%
  • Cincinnati: from 29.6% to 43.9%
  • Montgomery County, PA: from 22.7% to 31.2%
  • Philadelphia: from 29.4% to 37.1%

All-cash purchases were most prevalent in Florida. The metros with the highest percentage of these purchases were: 

  • Jacksonville: 49.7% of home sales using all cash
  • West Palm Beach: 48.6%
  • Cleveland: 47% 
  • Cincinnati: 43.9%
  • Atlanta: 41.3%

Pricey West Coast metros dominate the list of markets with the lowest percentage of all-cash purchases, with the Bay Area at the top.

  • San Jose: 14.3%
  • Oakland: 16.5%
  • Seattle: 19%
  • Los Angeles: 19.2%
  • Newark, NJ: 20%

Good news for borrowers with FHA loans

With the slowdown in buyer competition making it easier for bidders with lower down payments to win a home, the shares of home purchases involving an FHA or VA loan have gone up. 

About one in seven (14.6%) mortgaged home sales involved an FHA loan—up from 13.1% a year earlier and from the record low of 10.4% in April. It’s also the highest share in almost two years. 

Conventional loans are still the most common type overall for homebuyers, amounting to 78.5% of all mortgaged home sales in October—down from 80.5% a year ago but still consistent with where its share of the market has stood since 2020. 

FHA and VA loans, both of which typically allow for lower down payments, have ticked up in frequency as buyer competition has slowed. 

Both were less common at the height of the pandemic buying frenzy when sellers could count on receiving multiple offers and often favored those with the strongest financing. 

The percentage of mortgaged home sales using VA loans rose to 6.9% in October—up slightly from 6.4% a year ago and from the record low of 5.5% in mid-2021. It’s also the highest share in over two years. 


Source: Redfin

Top takeaways for real estate agents

The slowdown in competition creates an opening for any clients hoping to take advantage of FHA or VA loans. Keep relevant data on these loans available and be ready to explain the short- and long-term advantages of each type of mortgage loan. 

While you can’t pre-qualify them for any, you can help them prepare for a meeting with a recommended mortgage lender. 

As for clients who can pay in all cash, be ready to help them navigate the process so they don’t spend more than necessary to secure the home they want.