More than one-third of homes were bought with cash in February because mortgage rates are still high, according to a new report from the real estate company Redfin.
The proportion of purchases made entirely in cash — meaning no mortgage loan information is included in the deed — are close to the record high of 38 percent in 2013.
While mortgage rates have decreased slightly from their peak of 8 percent in October, they are still considerably higher compared to the lowest rates achieved during the pandemic.
As home prices rose by 6.6 percent in February compared to the previous year, home buyers are increasingly making larger down payments to lower their monthly mortgage payments.
The median down payment for a house increased to $55,640 in February, a 24.1 percent rise from February 2023, as stated by Redfin.
However, many buyers, especially first-time home buyers, cannot afford to purchase homes with all cash or make larger down payments, according to experts at Redfin.
“High mortgage rates are exacerbating the wealth gap among people from different races, generations, and income levels,” noted Chen Zhao, economics research lead at Redfin.
“The increase in rates has amplified the impact of soaring home prices during the pandemic, resulting in a situation where affluent Americans are the only ones capable of buying homes in many areas,” added Zhao. “Meanwhile, those who cannot afford homeownership are missing out on a significant opportunity to build wealth, which could have financial repercussions for their children and even their grandchildren.”
