New Home Sales Increasingly Backed by FHA Loans
Revealing that the share of new home sales backed by FHA loans climbed from 12.1% (revised) to 14.0% in the second quarter of 2023, the National Association of Home Builders’ (NAHB) analysis of the most recent Quarterly Sales by Price and Financing report showed that this is the largest share since Q1 2021. Though it is still roughly three percentage points lower than the post-Great Recession average.
According to Eye On Housing, conventional loans financed 73.7% of new home sales, down one percentage point over the quarter and 2.7ppt, year-over-year. The share of VA-backed sales edged up from 5.2% to 5.4%, a 0.8 ppt decline over the past year.
Cash purchases made up 6.5% of new home sales in the second quarter of 2023. The share has declined each of the past two quarters and is down 4.2 ppt over that period. The share of cash purchases has decreased 2.9 percentage points over the past year and has ranged from 4.1% to 10.7% since Q2 2020.
Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 26% of existing home transactions were all-cash sales in June 2023, up from 25.0% in May and June 2022.
