More than 1 in 3 February home purchases were made with cash: Report

More than a third of homes were purchased with cash in February as mortgage rates remain high. According to a new report From real estate company Redfin.

The all-cash purchase rate (defined as a home purchase with no mortgage information included in the deed) is well within reach of its all-time high of 38 percent set in 2013.

Mortgage rates have fallen slightly from their 8% peak in October, but are still significantly higher than the record lows achieved during the pandemic.

Home prices also rose 6.6% in February compared to the same month last year, and homebuyers are increasingly preparing larger down payments to reduce their monthly mortgage payments.

The median home down payment jumped to $55,640 in February, an increase of 24.1% from February 2023, according to Redfin.

But most buyers, especially first-time homebuyers, can’t afford to buy an all-cash home or make a large down payment, Redfin experts said.

“High mortgage rates are widening the wealth gap between people of different races, generations, and income levels,” said Chen Zhao, head of economic research at Redfin.

“Adding fuel to the fire of rising home prices during the pandemic, it is creating a reality in which only wealthy Americans can afford to buy homes in many places,” Zhao added. “Meanwhile, those who give up homeownership are missing out on significant wealth-building opportunities, which can have financial implications for their children and even their children’s children.”