All-cash offers are reshaping the U.S. housing market in 2025, with nearly one in three home purchases now completed without financing, according to a fresh analysis from Realtor.com. Despite recent Federal Reserve efforts to lower interest rates, mortgage rates remain stubbornly high, creating a market where deep-pocketed buyers—ranging from institutional investors to Baby Boomers—have a distinct edge over first-time and younger buyers. The implications are profound, signaling a new era for both homeownership and the broader real estate economy.
As of the first half of 2025, all-cash transactions accounted for about 32.8% of home purchases, a figure that, while slightly lower than last year, sits well above pre-pandemic norms. "These transactions are especially common at the extreme ends of the price spectrum," noted Hannah Jones, senior economic research analyst at Realtor.com. She points to a pronounced U-shaped pattern: cash dominates both the low end—where as many as two-thirds of homes under $100,000 sell without loans—and the high end, with over 40% of homes above $1 million changing hands in cash.
Jones’s analysis reveals that institutional investors and second-home buyers, especially those operating through LLCs or corporate entities, make up a “disproportionate share” of these cash deals. Her research shows the share of investors paying all cash in 2024 was nearly double the overall cash sales share. Although large investor activity has waned since the pandemic’s peak, investor presence remains elevated, and cash continues to represent a sizable part of the market. “After dominating some markets during the pandemic, large investor activity has retreated, giving way to smaller investors who more often use financing,” Jones concludes. Yet, with many non-investor buyers sidelined by affordability constraints, the playing field remains far from level.
ResiClub co-founder Lance Lambert told Fortune that investors and second-home buyers have “always been a big chunk of the all-cash market,” but the current landscape—marked by elevated mortgage rates—has brought more Baby Boomers into the fold. “We’re seeing all-cash buyers also include more Baby Boomers who are more likely right now to roll over their equity into that next home,” Lambert explained. He added that while every category of homebuyer has contracted since mortgage rates surged in 2022, all-cash buyers haven’t retreated as sharply, boosting their share of the market.
Geographical differences are striking. States like Mississippi (49.6%), New Mexico (48.8%), Montana (46.0%), Hawaii (44.9%), and Maine (44.4%) lead the nation in cash sales, driven by a mix of affordable prices, out-of-state demand, and older populations. In contrast, mortgage-dependent hubs such as Washington (21.1%), Washington, D.C. (23.4%), and Maryland (24.0%) see much lower proportions of cash deals, reflecting younger buyers and robust lending infrastructure. On the metro level, Miami (43.0%), San Antonio (39.6%), and Kansas City (39.2%) top the charts, often due to a mix of investor activity and luxury or international buyers. Meanwhile, Seattle (17.9%) and San Jose (20.6%) see the lowest cash purchase rates, as high local incomes and younger populations lean more on traditional mortgages.
But why are mortgage rates refusing to budge, even as the Federal Reserve cuts its benchmark rates? According to a comprehensive October 2025 analysis from Market Minute, the answer lies in a complicated web of economic forces. While the Fed’s federal funds rate influences short-term borrowing, fixed-rate mortgages are far more sensitive to the yield on the 10-year U.S. Treasury note. This yield, in turn, reflects market expectations about inflation and economic growth, often moving independently of Fed policy. As of October 2025, the average 30-year fixed mortgage rate remains stuck in the mid-6% range, defying hopes for more affordable home loans.
Inflation expectations are a major culprit. Lenders and investors, wary of the long-term erosion of purchasing power, demand higher yields on assets like mortgage-backed securities and Treasury bonds. Recent data from September 2025 shows household inflation expectations are still elevated, keeping upward pressure on rates. Bond market dynamics only add to the complexity. Mortgage rates typically maintain a 2-3% spread above the 10-year Treasury yield, and when bond prices fall, yields—and mortgage rates—rise. The Fed’s ongoing quantitative tightening, which reduces its holdings of Treasury securities and mortgage-backed securities, further removes liquidity and pushes long-term rates higher.
Investor sentiment also plays a pivotal role. During uncertain times, investors may flock to safe-haven assets like Treasuries, driving yields down. However, if optimism about economic growth or new opportunities—such as AI data centers—emerges, capital can shift away from bonds, causing yields to rise. Minneapolis Fed President Neel Kashkari even noted that heavy investment in AI could divert capital from housing, contributing to persistently high mortgage rates.
This disconnect between Fed policy and mortgage rates has triggered what analysts call a “lock-in effect.” Homeowners with ultra-low mortgage rates, some below 3.75%, are reluctant to sell, further constraining housing supply. As a result, only about 28% of U.S. homes are affordable for the typical household as of October 2025, according to Market Minute. The lock-in effect and limited supply have kept home prices elevated, even as sales activity slows and affordability worsens.
The ripple effects are being felt across the economy. Mortgage lenders (like Rocket Companies and UWM Holdings), real estate brokerages (Anywhere Real Estate, RE/MAX), and homebuilders (D.R. Horton, Lennar Corporation, PulteGroup) are all under pressure from reduced transaction volumes. Building materials suppliers (The Home Depot, Lowe’s) and home furnishings retailers (Williams-Sonoma) are also seeing diminished demand. On the flip side, apartment REITs and rental housing companies (Equity Residential, AvalonBay Communities, Essex Property Trust) are benefiting from increased demand as more people are forced to rent. Diversified banks like JPMorgan Chase and Bank of America, as well as insurance companies and utilities, are proving more resilient in this environment.
Looking ahead, the housing market is expected to face continued affordability challenges and sluggish sales activity over the next 12 to 24 months. Demand for rentals is likely to remain robust, potentially fueling rent inflation. Historically, mortgage rates have not always fallen in lockstep with Fed rate cuts—after the 2008 financial crisis, for example, only direct intervention like quantitative easing succeeded in bringing rates down. More recently, in late 2024, mortgage rates actually rose following Fed rate cuts, underscoring how broader market forces can outweigh central bank moves.
For homebuyers and investors, this means adapting to a new reality. Buyers may need to adjust budgets, explore alternative mortgage products, or focus on government-backed loans. Investors might prioritize cash flow-positive properties and long-term holding strategies. Financial institutions will need to diversify their offerings and manage risk more carefully.
Ultimately, the persistent “stickiness” of mortgage rates, even as the Federal Reserve tries to loosen monetary policy, marks a fundamental shift in the housing market. With rates likely to hover in the mid-6% range through 2025 and home prices remaining high, homeownership will remain a challenge for many Americans. The market is entering a new era, where cash is king, and the path to owning a home is more complex—and competitive—than ever before.
