All-Cash Purchases Down on Exisiting Homes, Up on New Builds
By Kelly Leighton | Feb. 28, 2023 | 2 min. read
All-cash new homes sales hit a record high in the fourth quarter of 2022.
According to the National Association of Home Builders, all-cash purchases represented 11.2% of new home sales in the previous quarter, a 32-year high. Conventional loans represented 76.1% of new home sales, down 0.2% from the previous quarter, but still remaining high. Meanwhile, the percentage of both VA loans and FHA-backed loans fell. VA-backed loans dropped to 5.2% of all new home sales, down 1% year over year, while FHA-backed loans dropped to 7.5%, a 3% year over year decrease.
The report also found that the median price of a home purchased with all cash dropped to $370,900 in the fourth quarter, down from $450,600. In the last quarter of 2022, the average new home sold for $467,700. For those who took conventional loans, the average price was $531,400; for those who used FHA loans, it was $330,200 and for those who used VA loans, it was $370,900. Between 2020 and 2022, homes financed by FHA loans saw the biggest gain in home prices, rising nearly 38%, compared to conventional loans, where the average home price rose 33.4%. All-cash purchases saw the average price go up 28.4%, while VA loan-backed purchases increased about 25%.
All-cash purchases of homes across the spectrum remains high, with 31.2% of purchases being paid for that way in December 2022, down just slightly from an eight-year high of 31.9% in November, according to Redfin.
Both Philadelphia and Pittsburgh had strong all-cash markets in December. The report found that 35.9% of homes in Philadelphia were all-cash purchases in December, while 32% of all home sales in Pittsburgh were all-cash.
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