[1]While REO sales still had the largest share of all-cash home sales in December 2014, both the share of cash sales that are REO sales and the share of REO sales that are cash sales were down month-over-month, according to data released by CoreLogic [2] on Monday.
REO sales have historically had the largest cash sales share, as they did in December, when 58.4 percent of all REO sales were cash sales. This percentage was down slightly from November's total of 61.1 percent but still well above half. Conversely, REO transactions accounted for 8.8 percent of all cash sales in December, down slightly from 10 percent that was reported in November. By comparison, at their peak, REO sales made up about 23.9 percent of cash sales in January 2011.
"I believe that the slight decrease in REO cash share is due to some seasonal volatility, as we’ve seen this same pattern moving from November to December months since 2010," said Molly Boesel, senior economist with CoreLogic. "I would assume that the REO cash share would trend down a little in 2015 during the year, but then have the potential to edge back up close to 60 percent again at the end of the year."
The percentage of short sales that were all cash sales held steady from November to December at 32.7 percent, and the percentage of newly-constructed home sales that were cash sales declined slightly month-over-month in December at 15.6 percent, down from 16.3 percent in November. The percentage of re-sales that were cash sales ticked slightly upward month-over-month, from 35.2 percent to 35.4 percent.
The decline in REO sales share correlated with the decline in all cash sales for both December 2014 and for the full year. Cash sales accounted for 35.5 percent of all home sales in December, a drop from 38.5 percent in December 2013 – marking 24 consecutive months of year-over-year declines in cash sales share. By comparison, cash sales share averaged approximately 25 percent prior to the housing crisis and reached its peak of 46.5 percent in January 2011 at the height of the foreclosure wave.