Just under three in 10 (28.8 percent) homebuyers paid in all cash in August, down incrementally from 29 percent a year earlier, according to a report from Redfin.
The prevalence of all-cash payments peaked at nearly 35 percent in late 2023 and early 2024 because mortgage rates peaked in the high-7 percent range during that time. Buyers were inclined to pay in cash — if they could afford it — to avoid high monthly interest payments.
When mortgage rates came down from that peak, all-cash payments became less common, as lower rates mean lower interest payments, Redfin said. 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.
While the share of buyers paying cash has declined from its high point, it is essentially unchanged from last year. That’s largely because mortgage rates were sitting between 6.5 percent and 6.6 percent in August, mostly flat from a year before, keeping interest payments the same.
Fewer all-cash buyers can be good news for house hunters who don’t have the means to purchase a home without a loan, especially when paired with the fact that buyers in most markets hold negotiating power, according to Redfin. Now that rates have declined a bit more to a weekly average of 6.27 percent, all-cash purchases may become even less common.
“First-time buyers have more opportunities than they did when the market was hot; they’re no longer competing against 10 other offers from people who are either paying in cash or shelling out a 50 percent down payment,” Phoenix-based Redfin Premier agent Kathy Scott said in a release. “House hunters are able to take a breath and think more clearly about where they want to live and what type of house they want. When they find it, they can make an offer they feel comfortable with, even if it’s below the asking price, and there’s a real chance the seller will accept. Home prices may dip a bit in the next year or so but now is a great time to start building equity if you’re planning to stay in your new home for five to 10 years.”