Photo: Robert Clark
As US new home sales soared in the third quarter of this year, the number of homebuyers paying all in cash declined.
Over the last quarter, the share of cash sales for new homes dropped to 4.8 percent, after rising to 6.5 percent in the second quarter, according to analysis of the latest Census data by the National Association of Home Builders (NAHB).
“Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales — roughly 20% of existing home transactions were all-cash sales in September,” says NAHB in the report.
Meantime, the share of new homes purchased with a conventional mortgage — a mortgage that is not backed by a government lender — climbed to 72.8 percent, the highest share in a year.
“Conventional financing has expanded as the housing recovery has continued,” says NAHB in the report.
In 2009, the share of new homes purchased with a conventional mortgage was 62.2 percent, but has hovered between 68 percent and 75 percent over the last four years.
And, the percentage or new homes purchased with FHA-loans or loans issued by Federal lenders, remained steady from the previous quarter at 14.3 percent of total home sales. But since last year, the share of new homes purchased with FHA loans has fallen from a high of 17 percent recorded in the first quarter of 2016, according to Census data.
Different financing sources are serving different markets. By comparing median home prices associated with different financing sources, NAHB found that different sources of financing serve different “distinct market segments.”
The national median price of a new home was $315,200 in the second quarter, compared to $335,100 with a conventional loan, $227,600 with a FHA loan and $314,200 for an all cash transaction.
Click here to read the entire report.