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October 2016

Cash sales drop below 30% for first time since late 2007

Cash sales slipped below 30 percent of total home sales in June 2016, marking the first time it was that low since late 2007. In its latest housing trends update issued last month, CoreLogic reported cash sales accounted for 29.3 percent of total home sales during June for a year-over-year drop of 2.5 percentage points.

Molly Boesel, a senior economist at CoreLogic, said cash sales are approaching pre-housing crisis levels. Prior to the crisis, cash sales of total home sales averaged around 25 percent, according to that firm's analysis. "If the cash sales share continues to fall at the same rate it did in June 2016, the share should hit 25 percent by mid-2018," she suggested. The cash sales share peaked in January 2011 when it hit 46.6 percent nationally.

The property information and analytics firm examines cash sales share by sale type and by state.

Real estate-owned (REO) sales made up the largest segment of cash sales in June, at 56.2 percent, followed by resales (28.9 percent) and short sales (27.7 percent). Newly constructed homes accounted for 15.2 percent of the cash sales component. "While the percentage of REO sales within the all-cash category remained high, REO transactions accounted for only 4.9 percent of all home sales during June," Boesel explained.

CoreLogic's state-by-state analysis of cash sales share shows New York had the largest portion (45.3 percent) for June, followed by Alabama, Florida, Oklahoma and Indiana. Washington's share was reported to be 22 percent, a percentage point higher than California, but below the percentage for Oregon (26), Montana (28), Nevada (30), and Idaho (31).

The firm's analysis of distressed sales, which include REO and short sales, showed a decline in most states. Distressed sales accounted for 7.8 percent of total home sales nationally in June, which marks an improvement from the same month a year ago when such sales accounted for 10 percent of total home sales.

CoreLogic's researchers use data from public, contributory and proprietary sources. Together, they total more than 4.5 billion records spanning more than five decades. The publicly-traded company is headquartered in Irvine, Calif.