More than one-third of homes were purchased with cash in February as mortgage rates remain high, according to a new report from the real estate company Redfin.
The rate of all-cash purchases — defined as home purchases where the deed does not include mortgage loan information — is within striking distance of the record high of 38 percent in 2013.
While mortgage rates have fallen slightly from their 8 percent peak in October, they are still significantly elevated compared to all-time low rates achieved during the pandemic.
With home prices also up 6.6 percent in February from a year earlier, home buyers are increasingly taking out larger down payments to reduce their monthly mortgage payment.
The median down payment for a house jumped to $55,640 in February, up 24.1 percent from February 2023, according to Redfin.
But most buyers can’t afford all-cash home purchases or a larger down payment, particularly first-time home buyers, the experts at Redfin noted.
“High mortgage rates are widening the wealth gap between people of different races, generations and income levels,” said Chen Zhao, economics research lead at Redfin.
“They’ve added fuel to the fire lit by surging home prices during the pandemic, creating a reality where in many places, wealthy Americans are the only ones who can afford to buy homes,” Zhao added. “Meanwhile, people who are priced out of homeownership are missing out on a major wealth building opportunity, which could have financial implications for their children and even their children’s children.”
