Record 10% of first-time buyers pay cash

One in ten first-time homebuyers paid entirely in cash during the latest reporting period, marking a record high since the National Association of Realtors began tracking the data in 2003. This shift occurs while the overall share of first-time buyers remains at a near-record low of 22 percent due to high prices and inventory shortages.

Jessica Lautz, deputy chief economist at the NAR, attributes the rise in cash purchases to generational wealth transfers. Buyers who paid all-cash were significantly more likely to use inheritances, with 28 percent citing inheritance as a funding source and 21 percent using proceeds from selling inherited property. The median age for all-cash first-time buyers is 54, compared to 38 for those who used financing and 40 for the overall group.

Lautz noted that buyers in their 50s often waited for specific financial events before entering the market. She observed that older buyers find it less comfortable to request loans or gifts from parents compared to those in their early 30s. Consequently, personal savings have become the primary funding source for down payments, surpassing financial help from family or friends. More buyers are also utilizing assets such as 401(k)s, stocks, or cryptocurrency.

Real estate professionals report seeing this trend accelerate since the pandemic. Jason Miller, a broker with Trust Real Estate Company in St. Cloud, Minnesota, stated he previously saw virtually zero all-cash first-time buyers in his first 15 years. Now, he frequently encounters clients who use equity from second properties or gifts from parents to create competitive offers. Miller described these funds as a form of future inheritance used to secure a purchase in a tight market.

Nate Johnson, a broker associate with RedKey Realty Leaders in St. Louis, added that all-cash offers remain a common strategy even in less competitive local markets. He noted that when five to six offers are on the table, three may be all-cash. Johnson has observed buyers who borrow cash from relatives to make an offer, then refinance after closing to repay the loan.

The NAR report predicts the share of buyers using inheritance will grow as baby boomers reach their 80s. The data illustrates a growing divide between those who are saving independently but remain priced out of homeownership and those waiting for a generational wealth transfer.

Seth Daphne Esmeson, who lives in Seattle and is nearing age 33, believes an inheritance may be the only realistic path to homeownership for them and their spouse. Despite having stable jobs, Esmeson cites debt from student loans and a car as barriers. They remain in their current rental, noting that the gap between their financial position and the cost of home equity continues to expand.