Redfin reported that 29% of homebuyers in the United States paid entirely in cash in December, the lowest share for that month since 2020, compared with 30.3% a year earlier.
Cash payments had peaked at around 35% in late 2023 when mortgage interest rates approached 7%, prompting buyers to avoid the high cost of borrowing. The current average rate on a 30-year fixed mortgage stands at about 6.09%.
The company also attributed the decline to a shift in the market in favor of buyers, as the number of sellers exceeds buyers by a record 47%. This gives buyers greater negotiating power and reduces the need to submit full cash offers. Nevertheless, cash deals remain attractive to sellers because they close quickly and can allow for discounts ranging from 10% to 20% in some cases.
By contrast, the share of loans backed by the Federal Housing Administration (FHA) fell to 14.4% of total loans in December, the lowest level since 2021. Although these loans are designed for low- and middle-income buyers and require a down payment of about 3.5%, the report attributes the decline to rising housing costs and closing fees, which have limited this group’s purchasing ability.
Meanwhile, conventional loans rose to 78.6% of total lending, the highest December share since 2021, while loans guaranteed by the U.S. Department of Veterans Affairs (VA) accounted for about 7% of transactions, a slight increase from last year.
This trend reflects a more balanced market that gives buyers greater financing flexibility after years of intense competition during the pandemic period.
