Even though sales to investors and sales of distressed homes have declined the National Association of Realtors® (NAR) reports that all-cash sales continue to climb.  According to Lawrence Yun, NAR's chief economist, these findings are counterintuitive and may indicate other changes are underway in the market.

NAR's Realtors® Confidence Index survey conducted each month among about 3,000 of its members, indicates all-cash home purchases rose from 29 percent in 2012 to 31 percent last year and accounted for 33 percent in the first quarter of 2014.  That same survey showed investors, who are typically the source of many of the all-cash transactions edged down from 20 percent of buyers in 2012 to 19 percent in both 2013 and the first quarter of this year.  

A second NAR study conducted among consumers, the 2014 Investment and Vacation Home Buyers Survey, shows investors at a somewhat higher market share, but declining more sharply from 24 percent in 2012 to 20 percent in 2013.

The Realtor survey also showed distressed home sales declining from 26 percent of the national market in 2012 to 17 percent in 2013 and 15 percent in the first quarter of 2014.  NAR projects that those sales will be in single digits by the fourth quarter of this year.

The Realtor group said the survey provided sufficient data to break information out on a state level for 29 states and to break out all census regions with information for every state. 

In Florida more than half of all homes were purchased with cash with very little change in the level of those sales from 2012 to the present.  Yet distressed home sales declined from nearly four in 10 purchases in 2012 to three in 10 during 2013, and investor transactions edged down.

All cash sales exceeded 40 percent in several other states including Nevada, Arizona and West Virginia.  Among the 29 states for which complete data was available the lowest levels of cash sales in the first quarter were reported in Maryland (17 percent) Colorado (19 percent) and Oregon (21 percent).  Those states had posted all cash shares that were 4, 2, and 6 percentage points higher respectively in 2013.

 "These findings beg the question as to why we're seeing higher shares of cash purchases," Yun said. "The restrictive mortgage lending standards are a factor, but the higher levels of cash sales may also come from the aging of the baby boom