According to the REALTOR® Confidence Index, there has been a high share of all-cash home purchases in this market—the latest monthly data shows 31 percent of purchases were all-cash, in fact. To make sense of the high number of all-cash purchases, it is worthwhile to look at several sources of NAR data to view the complete picture.

NAR has two historical data sets that show the complete picture. One is the Profile of Home Buyers and Sellers. The survey is a hard-copy mail survey and targets primary residence buyers.

According to the Home Buyers and Sellers survey, home financing has not changed drastically in the last several years. In 2010, 91 percent of recent home buyers financed their home compared to 92 percent in 2006. The typical home buyer in 2010 financed 92 percent of their home compared to the typical buyer in 2006 who financed 91 percent of their home. First-time buyers differ from repeat buyers in the share of the downpayment made, but over time both have been relatively flat.

The other historical data set is the Investment and Vacation Home Buyers Survey. This is where the data becomes interesting and there are substantial trends over time. The share of investment home buyers who financed their home purchase is dropping. In 2011, 39 percent used a mortgage, down from 68 percent in 2007. The share of the home financed also dipped for investment buyers. In 2011, the typical investment buyer had a downpayment of 30 percent compared to 22 percent in 2005.

Similar trends were true for vacation property buyers. In 2011, 63 percent of vacation home buyers used a mortgage in their home purchase, down from 75 percent in 2007. The typical vacation buyer had a downpayment of 32 percent compared to 25 percent in 2005.

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Home buyers who are purchasing their primary residence are still making financial sacrifices to buy a home amid record high affordability and do take mortgages on homes. In comparison, investors and vacation home buyers who do have the financial means to make a second home purchase are increasingly stepping away from the mortgage market and paying all-cash for their investments.

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