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In July, existing home sales declined from the previous month, maintaining a soft pace. Contract cancellations and delays were partly responsible. With banks retaining tight underwriting standards, many buyers find their mortgage application declined. In addition, appraised values are also adding to the failed loan underwritings.
The national median price for existing homes was $174,000 in July of this year, down 4.4 percent from July 2010. In light of these factors and given the favorable affordability conditions in many markets, it is not surprising that some first-time buyers are resorting to paying cash for their home purchases.
Based on the latest REALTORS® Confidence Index survey, 10.3 percent of first-time buyers purchased a home with cash. The proportion is in line with the average for 2011. It is worth noting that the percentage of first-time buyers purchasing with cash has been rising, from 5.2 percent in July 2009. The figure averaged 6.8 percent in 2009, 9.5 percent in 2010 and 11.4 percent in 2011 (through July).
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