Homebuyers nationwide ended 2025 with the smallest share of all-cash purchases in five years, according to a new Redfin report.
In December, only 29% of homebuyers paid for their homes entirely in cash, down slightly from 30.3% a year earlier, and marking the lowest December figure since 2020.
The shift reflects broader cooling in the housing market, with all-cash purchases having peaked at nearly 35% in late 2023, when peak mortgage rates in the high-7% range made buyers with cash at hand more competitive and willing to avoid high interest costs. As mortgage rates have fallen — the average 30-year fixed rate currently sits around 6.09% — and competition among buyers has softened, cash deals have become less necessary to secure a home.
Redfin characterizes the current environment as one of the strongest buyer’s markets in recent history, where sellers are outnumbered by buyers by a record 47%, reducing the urgency to make all-cash offers. In softer markets — particularly in Texas and Florida — homes can sit unsold for months, and cash offers retain some advantages, such as faster closings and negotiating leverage.
According to a Redfin Premier agent in Dallas, cash buyers in those areas can sometimes secure homes for 10%–20% below appraised value.
“The leverage buyers have when they pay in cash is unbelievable,” said Amanda Peterson, a Redfin Premier real estate agent in Dallas. “It’s not uncommon to see a buyer score a home for 10–20% below the appraised value if they offer cash.”
The decline in cash purchases accompanies changes in mortgage financing patterns, with the use of FHA loans having dropped to 14.4% of mortgaged purchases — the lowest December share since 2021 — as some potential buyers balked at upfront costs.
“A lot of homebuyers — especially FHA buyers — are getting cold feet when they see the actual monthly payment and the amount of money they need to bring to the table at closing,” said John Tomlinson, a Redfin Premier real estate agent in Fort Lauderdale, Fla. “They may only have a 3.5% down payment, but with prepaid taxes and mortgage insurance, closing costs can be $20,000–$30,000. Rising HOA fees are adding insult to injury.”
Meanwhile, conventional loans accounted for 78.6% of mortgage originations, the highest December share in several years. Usage of VA loans edged up slightly to around 7%.
Metro-level data reveal regional variations, with West Palm Beach, Jacksonville, and Miami showing the highest shares of all-cash purchases, while markets like Seattle, Oakland, and Sacramento recorded the lowest.
