Are High Mortgage Rates Leading to an Increase in All-Cash Purchases?

We’ve all seen the headlines…

…but is this actually the case?

Recently, I made the comment to my son that the increases in interest rates were causing more people to purchase homes with all cash. He asked, “How do you know?”

Echoing the headlines above, I replied, “The share of all-cash purchases is at an all-time high.” He then responded with, “But that doesn’t necessarily mean that there are now more all-cash buyers. Didn’t you tell me that home sales across the board are down? What if the number of all-cash buyers is the same as it ever was? If so, then the percentage of cash buyers of all home buyers would increase.”

Impressed with his insight, I complimented him and said, “You’re absolutely correct! Let’s look at the data and find out!”

He concluded with, “Have fun.”, as he walked away.

Let’s look at the home sale numbers for the Reno, Nevada metro area for the month of September.

The table above shows us some interesting trends. While it is true that the proportion of all-cash purchases to total home sales has increased over the past few years, the real number of all-cash sales has been declining. In fact, the number of cash sales in September is down 15.9% year-over-year, and down 30.8% from two years ago.

Let’s look at a larger data set…

The table above shows year-to-date data for the past three years. As can be seen the proportion of all-cash purchases to total home sales has remained relatively unchanged near the 24% mark. Yet, similar to the trend observed in the top table, the YTD real number of cash purchases has fallen — down 18.4% from the same period in 2022, and down 29.4% from the same period in 2021.

Looking at an even larger data set…

According to recent data from the National Association of REALTORS®, in August 2023 “27% of buyers had all-cash sales [in August 2023], up slightly from 26% [in July] and up from 24% in August 2022.

However, also from NAR, “August’s sales of existing homes weakened by 15.3% from August 2022.” The data shows 4,040,000 homes sold in August 2023 compared to 4,770,000 homes sold in August 2022. Applying, the “cash sales” metrics from above, we obtain the real number of cash buyers nationally to be:

  • 1,144,800 cash sales in August 2022
  • 1,090,800 cash sales in August 2023

…or, a 4.7% year-over-year decrease in the real number of cash sales.

So, are higher mortgage interest rates, which are currently at a 23 year high, really leading to more all cash purchases? On a real number basis the answer is no.

Reno, NV Metro area housing data courtesy of the Northern Nevada Regional MLS (September 30, 2023). National housing data from the National Association of REALTORS®. Note: This information is deemed reliable, but not guaranteed.


  1. Cristy Silverman

    Bravo to Kirk!! ??????

  2. Guy Johnson

    Thank you, Cristy!

  3. Anon

    Great article!

  4. Guy Johnson

    Thank you, Anon!

  5. Howard I Hirsch

    Well, and not only that, but this tracks the status of payment at time of purchase only. One clever real estate strategy is to pay cash for the property, and THEN get a mortgage at leisure, when you can borrow whatever you need and wait for a favorable interest rate to do it. I wonder how many buyers are doing that, and how this process might be tracked.

  6. Guy Johnson

    Interesting insight, Howard.

    Not sure how that could be tracked, though.

Leave a Reply

Your email address will not be published. Required fields are marked *