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.
It is not just the increase in home cost. The burdens of high taxes,insurance,HOA fees,and MUD taxes are hampering home ownership.