NAHB Builders Report 22% All-Cash Sales in 2024
A recent survey by the National Association of Home Builders (NAHB) found that, as of 2024, nearly one-quarter (22%) of new homes sold have been purchased outright with cash, without the need for a mortgage. This information was gathered through a special question added to the NAHB/Wells Fargo Housing Market Index survey in May.
According to NAHB, the percentage of all-cash sales is interesting, in part because it may indicate the availability of mortgage credit. Recently, the percentage has fluctuated directly with interest rates—especially the Federal Reserve’s target federal funds rate. This was discussed in detail in an earlier post on the Census Bureau’s quarterly “New Houses Sold by Price and Financing” release. Briefly, the Census release shows the share of all-cash sales increasing substantially since the Fed began tightening in 2022, reaching a peak of 10.7% in the fourth quarter of 2023 before declining to 6.6% in early 2024.
This is obviously a much lower share of all-cash sales than the 22% median reported in the May 2024 NAHB survey. Before simply concluding that the two surveys contradict each other, we should consider possible explanations.
The quarterly Census report is based on a sample of new homes. The NAHB survey is based on a sample of builders, many of whom tend to be small (see, for example, the recent article on Who Are NAHB’s Builder Members?). Larger builders, by definition, build a disproportionate number of the new homes; so, if larger builders tend to have smaller shares of all-cash sales, the different sampling frames could explain the apparent discrepancy between the Census and NAHB percentages.
This is not the case, however. In fact, in the NAHB survey, it is the smallest builders who show the lowest share of all-cash sales.
