States Where Homebuyers Pay Cash

As many as 40% of the homes sold in the U.S. in July were purchased in cash, up from 31% a year earlier, according to data published this week.

Rising interest rates are partly driving this uptick in cash sales, according to real estate data company RealtyTrac. Another reason may be the opportunity investors see in some markets. In some states, all-cash transactions made up a larger portion of sales than others. In Florida, nearly two-thirds of home sales were completed without a mortgage loan. Based on the RealtyTrac report, these are the states where the most homebuyers pay cash.

Click here to see the housing markets driven by cash

In an interview with 24/7 Wall St., RealtyTrac CEO Daren Blomquist explained that higher levels of institutional investing — rather than private purchases of families buying a home to live in — were the likely cause of the increased cash purchases in some of these states. This is because institutional investors almost always pay for homes in full upfront. Indeed, the majority of the states with the 10 highest cash purchases in July also had among the highest levels of institutional buying. In Georgia, which was sixth in the country for home cash purchases, 22% of all sales were to institutional investors, compared to a national rate of just 9%.

Many of the states with the most homes sold for cash are among the ones hardest hit by the housing crisis. Home prices in Florida, Nevada and Michigan plummeted 50% or more. Homes prices also are particularly low in some of these states. The median list price in Ohio was just $118,900 in July. This was more than $75,000 below the national median.

Blomquist explained that the decline in prices may be the reason for the higher cash sales in these states. "Both investors and regular buyers are seeing the most opportunity to jump in and buy, and are willing to use their own money," he said.

In many of these states, a large segment of home sales are "distressed," or homes purchased in foreclosure or owned by a bank. In Nevada, more than one in five homes sold in July were repossessed properties.

This is likely affecting the number of homes being purchased with cash in two ways. First, distressed homes can be bought at a significant discount — a median of just $52,000 in Michigan, for example. Second, "By nature, with distressed sales, besides the fact that it’s low-priced, when you buy a foreclosure property at the public foreclosure auction, in most states, you do have to pay cash there. No matter what the price, you do have to pay cash," Bloomquist added.

Based on data provided by RealtyTrac, 24/7 Wall St. reviewed the 10 states where the largest percentage of homes sold in July were purchased with cash. RealtyTrrac also provided median list price, as well as data on bank-owned sales, short sales and institutional sales for the states and the largest metro areas. All data is as of July 2013.

These are the states where the most homebuyers pay cash.