A home advertised for sale in a residential neighborhood in San Jose, Calif., on Aug. 15, 2024. Loren Elliott/Getty Images

The share of buyers purchasing properties by paying fully in cash dipped year-on-year in the United States as investors bought fewer properties amid high prices and mortgage rates, according to real estate brokerage Redfin. Investors make up a significant portion of buyers making such deals.

Redfin said cash buys made up just over 32 percent of home purchases in 2024, down from about 35 percent in 2023.

“The number of all-cash home sales dropped to its lowest level in at least a decade in 2024 as total home sales fell to historic lows,” the company said in a Feb. 18 statement.

The brokerage attributed the decline in share to investors buying fewer properties than in the past years.

Because investors account for a sizable chunk of buyers engaging in cash purchases, their interest level impacts the proportion of these deals.

Investor interest is declining as it is harder now to buy homes and sell them for big profits such as during the pandemic. Elevated home prices and loan costs make buy and flip tactics less appealing.

Related StoriesFor instance, the average sales price of homes sold in the United States in Q1, 2020, was $383,000, according to data from the Federal Reserve Bank of St. Louis. This jumped over 30 percent to $499,300 in Q1, 2022.

However, since then, the price has not made any large movements, rising by just 2.2 percent to $510,300 as of Q4, 2024. The slowdown in sales price growth makes properties less attractive to investors.

Elevated mortgage rates pose another challenge. The average weekly rate on a 30-year fixed-rate mortgage has remained above 6 percent for more than two years.

Even though the share of all-cash sales in 2024 was down on an annual basis, such sales still made up a “bigger piece of the homebuying pie than before the pandemic, when the share ranged from 25 percent to 30 percent,” the brokerage said.

Redfin senior economist Sheharyar Bokhari attributed the elevated all-cash sales rate to purchases made by wealthier Americans. When homes are expensive, as it is now, wealthy individuals who can afford to pay in cash are more likely to buy properties compared to the lower income group, he said.

Bokhari does not expect the share of all-cash purchases to change much this year. The only exception would be if mortgage rates tumble to a low enough level to trigger “a significant increase in sales.”

Out of the 40 metros tracked by the brokerage, West Palm Beach, with 49.6 percent, recorded the highest share of all-cash home purchases last year.

This was followed by Jacksonville, Cleveland, Fort Lauderdale, and Miami. Except for Cleveland, the remaining four metros are in Florida.Rise in PricesIn January, home prices rose by 0.6 percent on a monthly basis and 5.4 percent on an annual basis, with the annual jump being the slowest pace since August 2023, according to Redfin.

“Price growth in January mainly relates to homes that went under contract in December. Since then we have seen a slowdown in sales, along with an uptick in homes being listed,” Bokhari said.

“That’s likely to lead to slightly slower price growth moving forward because not only are homes sitting longer on the market, when they do go under contract, they are selling at nearly 2 percent under list price—the biggest discount in nearly two years.”

As for mortgage rates, the weekly rate for the 30-year fixed rate mortgage has declined for five straight weeks but continues to hover near the 7 percent level.

A key factor that could influence the trajectory of mortgage rates is the U.S. Federal Reserve’s decisions regarding interest rate cuts. In December 2024, the agency said there would be fewer rate cuts this year.During the Federal Open Market Committee meeting last month, officials kept interest rates unchanged.According to a Feb. 19 post by real estate marketplace Zillow, prospective homebuyers also seem to be “adopting the Fed’s ‘wait-and-see’ approach,” Zillow said. “Homes are taking longer to sell, and sellers are increasingly resorting to price cuts to close deals.”

“On a positive note, buyers who can afford homes at today’s interest rates may find they have more time to consider their options and greater leverage in negotiations.”