Less than three in 10 homebuyers (29%) bought a home in an all-cash transaction in December, according to a data report from Redfin. This is down from 30.3% a year earlier and the lowest December share since 2020.
The peak for all-cash homebuying was nearly 35% in late 2023 when mortgage rates soared to the high-7% range. Redfin noted that declining mortgage rates and a market where supply outweighs demand has diluted the need for pursuing all-cash acquisitions.
Also in decline are homebuyers using Federal Housing Administration (FHA) loans. Redfin noted that about one in seven homebuyers (14.4%) used FHA loans in December, down from 15.1% one year earlier and the lowest December share since 2021.
Redfin attributed the slump in FHA loans to a market where housing costs are so high that many low-to-moderate-income homebuyers who traditionally rely on that product have been priced out of the market. Not surprisingly, over three-quarters of mortgaged homebuyers (78.6%) used conventional loans in December, up slightly from 78.2% one year earlier and the highest December share since 2021.
