Number of cash home sales decline
There are not nearly as many cash deals for single-family homes this year, and they lost market share for the third straight month in August. Instead of trending slightly higher than the national level, they are now about the same market share.
According to the Northeast Tennessee Association of Realtors (NETAR), there were 153 August cash sales for single-family existing home in the seven NE TN counties the association monitors. So far this year they have averaged 164 sales a month. During the first eight months of last year, the average was 364 a month.
Although the number of all-cash deals has declined, their share of total sales has been in a similar range with last year. During August, they accounted for 29.4% of single-family homes. They have ranged from a low of 28.8% in January to August, with five months in the 31% to 33% range.
Existing home sales were down 14% from August last year, according to NETAR’s Homes Sales Report. The cash sales decline is a little more than double that – down 55%. There are several likely reasons driving the decline.
One possible explanation is it simply mirrors the home sales decline for the overall existing home market. But since 14% compared to 55% is a widespread there are other things at play.
One is mortgage rates. They’re now at their highest level in 15 years. Another is declining affordability and the desire to buy then upgrade is making cash deals less attractive. There’s also some speculation that the number of newcomers paying cash is declining.
Home purchase loans did increase by 27% during the second quarter after declining during the previous three quarters, so the softer sales trend could be flattening out at a pre-pandemic level. At mid-year, purchase loans were at the lowest volume since the first quarter of 2019.
Here’s how the median sales price and difference between the sold and asking prices looked for major loan types last month:
- Cash, $291,000, down $15,759 from asking price.
- Conventional, $311,000, down $5,705 from asking price.
- FHA, $247,900, down $5,700 from asking price.
- THDA, $179,150, down $5,120 from asking price.
- USDA, $177,500, up $2,200 from asking price.
- VA, $287,000, down $1,076 from asking price.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us