High Mortgage Rates Are Driving Buyers Toward All-Cash Home Purchases

Mortgage interest rates have remained elevated since the end of the pandemic, making all-cash home purchases increasingly attractive to buyers who can afford to forgo financing.

A new report from the National Association of Realtors® has found that for the last three years, more than a quarter of all home sales in the U.S. involved all-cash buyers who did not require a mortgage. 

This is no coincidence: From 2022 to 2025, mortgage interest rates surged from their pandemic-era record lows, peaking near 8% in fall 2023, before settling into the low to mid 6% range this year, according to NAR economists.

The elevated rates have made borrowing more expensive, squeezing first-time and lower-income buyers and leaving many sidelined. 

But at the same time, existing homeowners have benefitted from rising home equity, giving them the edge to make cash offers on their next home or a vacation property.  

As of October, all-cash buyers accounted for 29% of home sales nationwide, up from 27% the year before and 19% five years prior. 

These findings echo a recent report from Realtor.com® showing that roughly one-third (32.8%) of homes sold in the first half of 2025 were paid for in all cash. 

Harrison Polsky, a real estate agent at Douglas Elliman in Dallas, concurs that there is a strong correlation between climbing mortgage rates and cash sales.

"As mortgage rates increased, buyers with access to capital increasingly chose to close with cash or cash-equivalent financing," Polsky tells Realtor.com. "It became a bridge strategy. Close as cash to avoid rate and underwriting friction, then revisit permanent financing later through private banks or wealth advisers at more favorable terms."

As Realtor.com senior economic research analyst Hannah Jones points out in the report "Cash Is King: Trends in All-Cash Home Sales" released in October, there are clear advantages to buying with cash, from avoiding high borrowing costs and financing contingencies, to closing faster.

Polsky says that opting for a cash offer removes financial uncertainty and instantly enhances a buyer's credibility with the seller, giving them greater negotiating leverage. 

"Put simply, as borrowing becomes more expensive, paying with cash starts to look like a smarter, more competitive choice," writes Amethyst Marroquin, research assistant of Member and Consumer Survey Research at NAR.

What type of properties attract cash buyers?

Based on NAR's Confidence Index covering the last 10 months, cash buyers are typically existing homeowners looking for vacations homes, or investors acquiring rental properties.

From January to October 2025, 57% of vacation-home buyers and 56% of investment buyers paid in all cash. 

An analysis of deed data carried out by Realtor.com researchers this fall showed that institutional investors using limited liability companies and corporate entities were at the forefront of cash purchases.

On the other hand, all-cash deals made up just 19% of primary home purchases, with 81% involving financing, NAR's report showed.

An overwhelming share of first-time buyers of primary residences, meaning homes where they plan to live most of the time, continue to rely on home loans: In 2025, just 8% of these buyers made all-cash purchases, according to data from NAR’s "Profile of Home Buyers and Sellers."

On the other hand, a growing number of repeat primary residence buyers—existing homeowners looking for an upgrade—pay in all cash.

This year, one-third of repeat buyers made cash offers, down slightly from last year—but up from 10% in 2023.

Who are all-cash buyers?

Unsurprisingly, both first-time and repeat all-cash buyers tend to be older and wealthier than home shoppers who rely on financing, according to the NAR report.

The typical all-cash buyer purchasing their first home is 58 years old, compared with a first-time buyer relying on borrowing, who is 38 years old.

Among repeat home shoppers, those paying in cash have a median age of 68, which is 10 years older than financing-dependant repeat buyers. 

"These figures highlight how accumulated equity is shaped by who is able to purchase a home without borrowing," writes Marroquin. 

In fact, 60% of primary residence buyers who paid in all cash funded their purchase with equity from a home they continue to own or from the sale of their previous dwelling. 

"Repeat buyers have the privilege that first-time buyers do not have: time to build substantial home equity," according to the NAR analyst. "That equity becomes a powerful engine for personal and generational wealth."

Meanwhile, high-net-worth buyers often decide between paying cash or financing based on broader financial factors, including gains in the stock market, or the desire to preserve liquidity, rather than mortgage rates.

Geography of all-cash sales

The prevalence of all-cash home sales varies widely across markets, driven by prices, demographics, and local conditions. 

In the first half of this year, Miami boasted the nation’s highest share of cash deals, accounting for 43% of all transactions, followed by San Antonio, TX, at 39.6%; Kansas City, MO, at 39.2%; and Birmingham, AL, and Houston, TX, both at 38.8%.

What distinguishes these metros from the rest is that they combine strong investor interest with either relatively affordable inventory or with wealth-driven demand, according to the Realtor.com report. This supports the idea of the U-shaped relationship between prices and cash purchases.

In other words, affluent buyers tend to pay in cash for luxury properties at the high end of the market, while low-income buyers facing financing hurdles or investors pursuing high profits pay all cash for ultra-affordable homes.

The more budget-friendly San Antonio saw the steepest annual increase in its share of all-cash sales, up 7.7 percentage points from 2024, with Houston in second place, with 3.5 percentage points, and Dallas in third with 2.5. 

Jones wrote in the report this trio of Lone Star State markets have benefited from an influx of affluent transplants and investors targeting rapidly growing Sun Belt destinations rich in for-sale homes.  

Polsky says that most cash buyers in Dallas are repeat primary residence buyers or institutional players rather than vacation-home purchasers.

"Many are using portfolio-backed lines of credit or short-term liquidity from their wealth managers to close as cash buyers," he explains. "That strategy allows them to compete in a fast-moving Dallas market, then go back after closing to secure longer-term financing once rates or terms improve.”

Although cash buyers make up slightly less than one-third of the U.S. housing market, they wield an outsized influence amid persistent affordability challenges, making it harder for lower-income households that rely on financing to compete.

"Persistently high mortgage rates and elevated home prices have narrowed the pool of households that can afford to buy, leaving a market dominated by financially well-qualified buyers," says Jones. "To limit interest costs and strengthen their offers, these buyers are more likely to make large down payments or purchase with cash."

Polsky adds that sellers prioritize speed and certainty, meaning mortgage-backed buyers must be "exceptionally strong on terms, timing, and proof of funds" to compete with all-cash offers.

If mortgage rates were to significantly ease in the future, the balance between all-cash and financed purchases could shift, with more first-time buyers relying on home loans returning to the market after being pushed out by elevated costs and fierce competition from wealthy shoppers throwing around cash offers.