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1/3 of U.S. Buyers Using Cash, More in Fla.

The percentage of U.S. cash sales in April hit its highest level since 2014. In Fla., it ranges from 35.1% in Orlando up to 53.6% in West Palm Beach.

SEATTLE – One-third (33.4%) of U.S. home purchases were made in cash in April, up from 30.7% a year earlier, for the highest share in nine years, according to a report from Redfin.

All-cash purchases make up a bigger portion of the homebuying pie for one major reason: Elevated mortgage rates are deterring homebuyers who take out mortgages more than they’re deterring all-cash buyers. In April, overall home sales were down 41% year-to-year, though cash sales only fell 35%.

In Florida, cash sales make up an even bigger piece of the real estate pie. Even in the Florida metro with the fewest cash sales, Orlando, the percentage still slightly beat the national average (35.1%) year-to-year. In two Florida metros, more than half of all sales were for cash.

April’s share of all-cash Florida home sales by metro

  • Fort Lauderdale: 42.3%, down 3 percentage points
  • Jacksonville: 52.2%, down 3.3. ppts
  • Miami: 40.9%, up 0.9 ppts
  • Orlando: 35.1%, down 4.4 ppts
  • Tampa: 37.7%, down 5.8 ppts
  • West Palm Beach: 53.6%, down 5.5 ppts

A homebuyer who can afford to pay in all cash is weighing two potential paths,” says Redfin Senior Economist Sheharyar Bokhari. “They can use cash to pay for the home and avoid high monthly interest payments, or (they can) take out a loan and pay a high mortgage rate. In that case, they could use the money that would have gone toward an all-cash purchase to invest in other assets that offer bigger returns, which could partly cancel out their high mortgage rate.”

Buyers who can’t pay in cash also have two choices, though the first is not a good one: They drop out of the market altogether. “Or they can take on a high rate,” says Bokhari. “That discrepancy is the reason the all-cash share is near a decade high, even though all-cash purchases have dropped: Affluent buyers have the choice to pay cash instead of dropping out of the market.”

On the other hand, the share of homebuyers using FHA loans hit its highest share since before the pandemic in April. Roughly one in six (16.4%) U.S. mortgaged home sales used an FHA loan, the highest share since February 2020, just before the pandemic began. That’s up from 10.4% a year earlier; representing the largest year-over-year gain on record.

April’s share of FHA-loan Florida home sales by metro

  • Fort Lauderdale: 17.2%, up 5.9 percentage points
  • Jacksonville: 18.1%, up 7.8 ppts
  • Miami: 17.8%, up 7.9 ppts
  • Orlando: 21%, up 10.2 ppts
  • Tampa: 20.7%, up 10.3 ppts
  • West Palm Beach:14.5%, up 6.2 ppts

Nationally, just under 7% of mortgaged home sales used a VA loan, down from an eight-year high of 8% in February but up from 5.9% a year earlier.

April’s share of VA-loan Florida home sales by metro

  • Fort Lauderdale: 4.3%, up 0.8 percentage points
  • Jacksonville: 14.3%, up 0.1 ppts
  • Miami: 2.2%, up 0.9 ppts
  • Orlando: 6.3%, up 0.5 ppts
  • Tampa: 10.3%, up 2.9 ppts
  • West Palm Beach: 3.4%, up 1.1 ppts

Conventional loans are the most common type, making up more than three-quarters (76.8%) of mortgaged home sales. But the share of buyers using a conventional loan dropped from 83.7% from a year earlier.

Redfin agents in pandemic homebuying boomtowns, including Orlando, report that they saw an uptick in FHA loans in early spring. But Orlando Redfin agent Nicole Dege said she’s noticed a decline in buyers using FHA loans since then as inventory has fallen and competition has ticked up.

High mortgage rates may also make buyers more likely to choose an FHA loan instead of a conventional loan since FHA rates tend to be slightly lower. On June 6, the average daily FHA rate was 6.54% versus 6.89% for a conventional loan.

Jumbo loans, however, have become less popular as rates stay elevated. Just 6.1% of mortgaged home sales used a jumbo loan in April, down from 10.6% a year earlier but up from the decade-low of 4.3% hit in January. That trend varied in Florida metros but was still down in all metros listed.

April’s share of jumbo-loan Florida home sales by metro

  • Fort Lauderdale: 5.8%, down 2.7 percentage points
  • Jacksonville: 4.4%, down 0.3 ppts
  • Miami: 10.9%, down 3 ppts
  • Orlando: 2.8%, down 2 ppts
  • Tampa: 2.8%, down 1.4 ppts
  • West Palm Beach: 8.8%, down 3.8 ppts

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