Cash was the top source of financing home purchases in September, as more homeowners look to deleverage their debt. According to a recent Campbell/Inside Mortgage Finance survey, 30.5% of home purchases during the month were financed with cash, up from 24.4% in January.
The survey attributed this jump to the amount of distressed properties on the market being purchased and a decrease in the number of first-time homebuyers. Distressed properties are more likely to be bought with cash because they are at a lower valuation and don't require as much financing, and first-time homebuyers do not typically have enough cash on hand to buy homes without financing.
As of September, real estate-owned and short sale transactions accounted for 47.5% of market purchases, according to the Federal Reserve Bank of Cleveland. First-time homebuyers accounted for 34.4% of purchases, down from 42.4% in June
This also a sign that credit market is showing some tightening.
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