Cash Home Purchases Drop To Lowest Level Since Beginning of Pandemic
Fewer U.S. homebuyers slapped all-cash payments on sellers' tables in December 2025 as interest rates fell and buyers negotiated better terms than the previous year, according to a new analysis from Redfin.
With the decline in 30-year fixed interest rates to 6.09% following the Fed's cuts, some buyers who might once have paid in cash to avoid interest rates in the high 7% range no longer have the incentive to do so. Similarly, in a market where sellers outnumber buyers by 47%, buyers are no longer driven to make cash offers or waive contingencies to close on a house.
The result has been a drop in the number of homebuyers paying all cash from 30.3% in December 2024 to 29% a year later – the lowest level since 2020, and well below the peak of 35% in late 2023.
Nevertheless, buyers who can fork over cash may still improve their leverage in a sale. According to a Redfin agent in Dallas, cash deals have been known to save a buyer 10-20% of the appraised value of a home. In addition, cash transactions are likely to close faster than if the buyer took out a loan.
Three metros in Florida – West Palm Beach, Jacksonville and Miami – saw the largest number of all cash transactions, while West Coast cities like Seattle, Oakland and Sacramento saw the fewest.
The report also noted that the share of borrowers taking out FHA loans is slipping. There was a drop from 15% in December 2024 to 14.4% in December 2025 in the number who used them as would-be borrowers realized the total monthly payment required to repay the loan and meet other conditions.
"They may only have a 3.5% down payment, but with prepaid taxes and mortgage insurance, closing costs can be $20,000–$30,000. Rising HOA fees are adding insult to injury," noted John Tomlinson, a Redfin agent in Fort Lauderdale. High housing costs are another deterrent for the low-to-moderate income buyers FHA loans are intended to help.
FHA loans were most popular in the Riverside, Las Vegas and Atlanta metros, where they represented about one of every four loans.
At the same time, the share of homebuyers using conventional loans increased slightly from 78.2% to 78.4% – the highest share for December since 2021. There was also a slight increase in the number of VA loans issued, especially in Virginia Beach and Jacksonville; the fewest VA loans were made in San Francisco, San Jose and New York.
Source: GlobeSt/ALM