A lack of fresh listings is driving up demand in the for-sale market, where borrowers are losing out to cash buyers at an accelerated rate. Cash buyers represented 33.4% of all transactions in April, well above an average of around 25% for the past decade.
Stricter underwriting, as banks continue to tighten credit, means closing a real estate transaction could take up to eight weeks, a time frame that all-cash buyers are able to avoid, Insider reports.
On Thursday, Redfin reported that a 25% drop in new listings has pushed down the total number of homes on the market by 5% year over year — the lowest levels for early June since it began collecting the data in 2015.
The result: Some homebuyers are dropping out of the market even if they could stomach the borrowing costs.
"Cash offers used to be an occasional nuisance and now they're becoming disruptive" to the market, said Debra Shultz, a vice president of mortgage lending at CrossCountry Mortgage.
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