Cash sales of new homes hit 7-year low

by Anna Sobrevinas03 May 2017
Cash sales accounted for only 4.7% of new home sales, according to an analysis of recent census data by the National Association of Home Builders (NAHB). That’s a drop from a 9.5% peak in Q4 of 2014, and the lowest level since 2010.

On the other hand, conventional mortgages dominated as the financing source for new home sales with 72.5% – the second-highest share since Q4 of 2014.

FHA loans placed second with 14.8%, followed by VA-backed home sales with 8.1%. Between the 2001 financial crisis and the recession in 2008, VA loans averaged just 2.9%, but rose to a whopping 9.3% on average after the recession in 2009.

Despite the small percentage of cash finances in new home sales, a large share of existing homes are sold for cash. In February, cash sales made up 27% of existing home sales – the highest level since November of 2015, according to the National Association of Realtors.

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