🏠 Cash Home Purchases Drop in Texas: What Lower Mortgage Rates Mean for Buyers & Investors 📉

💰 All-Cash Offers Are Falling — Is 2026 the Year of Smart Leverage in Texas?

Cash Home Purchases Drop to Lowest Level Since the Pandemic — What It Means for Texas

All-cash home purchases declined nationally in December 2025, reaching the lowest level since early 2020. According to recent data, the share of buyers paying entirely in cash fell from 30.3% in December 2024 to 29% in December 2025 — well below the late-2023 peak of 35%.

The primary driver? Lower mortgage rates.

With the 30-year fixed rate easing to roughly 6.09%, many buyers who previously chose cash to avoid 7%+ borrowing costs are re-entering the financing market. At the same time, sellers now outnumber buyers nationally by approximately 47%, shifting negotiating leverage back toward buyers.

For Texas — especially Houston, Dallas-Fort Worth, San Antonio, and Austin — this shift has meaningful implications.

Texas Cash Buyer Trends

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Texas historically sees above-average investor and cash participation, particularly in:

·Houston

·Dallas

·San Antonio

·Austin

During 2023–2024, certain North Texas submarkets recorded cash shares in the 30–33% range, driven by:

·Institutional build-to-rent operators

·Private equity-backed rental aggregators

·Fix-and-flip investors targeting resale inventory

Now, with rates easing into the low-6% range, leverage is becoming attractive again — particularly for investors focused on yield optimization.

Cash still carries negotiating power. In select Dallas transactions, buyers have negotiated 10–20% below appraised value when presenting clean, contingency-light offers.

However, the urgency premium has faded.

FHA Usage Declining in Texas

National FHA usage slipped from 15% to 14.4% year over year. Texas mirrors this pressure — particularly in higher-tax counties.

Key Texas-specific affordability constraints:

·Effective property tax rates often 2%–3%+

·Rising homeowners insurance premiums

·HOA fee growth in master-planned communities

·Escrows + mortgage insurance pushing cash-to-close into the $20,000–$30,000 range

In many Texas metros, FHA historically accounts for 18–22% of financed transactions, especially among first-time buyers in Houston and San Antonio. But payment sensitivity is limiting usage — even with 3.5% down options.

For borrowers, the issue isn’t just down payment — it’s total monthly obligation.

Conventional & VA Loan Strength

Conventional loans ticked up nationally (78.2% → 78.4%), reflecting stronger borrower profiles and improved rate competitiveness.

Texas continues to show above-average VA loan utilization, particularly near:

·Joint Base San Antonio

·Fort Cavazos (Killeen)

·Fort Bliss (El Paso)

VA borrowers benefit from:

·Zero down payment

·No monthly mortgage insurance

·Competitive rates

In a stabilizing rate environment, VA and conventional financing are increasingly compelling alternatives to all-cash deployment.

Strategic Implications for Texas Buyers & Investors

1️⃣ Leverage Is Returning as a Tool

When rates were 7%+, cash was defensive.
At ~6%, leverage becomes strategic again.

Preserving liquidity allows:

·Portfolio diversification

·Emergency reserves

·Additional investment opportunities

·Higher internal rate of return through capital efficiency

Smart leverage — properly structured — enhances optionality.

2️⃣ Negotiation Power Has Shifted

Inventory levels have normalized across much of Texas.

In Houston suburbs and Dallas exurbs:

·Financing contingencies are less punitive

·Sellers are offering concessions

·Inspection negotiations are more balanced

Financing is no longer a competitive disadvantage.

3️⃣ Investor Behavior Is Evolving

Institutional buyers who relied on cash to move quickly may pivot toward structured debt to enhance yield.

For rental-focused investors in Texas:

·DSCR loans are gaining traction

·Fixed-rate structures improve predictability

·Liquidity preservation improves portfolio resilience

4️⃣ Affordability Remains the Core Constraint

Despite improving rates, Texas affordability is pressured by:

·Elevated home prices vs. 2019

·Property tax burdens

·Insurance volatility

·HOA fee growth in suburban developments

This means buyers must focus on structure — not just price.

Bottom Line

Cash purchases are declining because urgency is declining.

As rates moderate and inventory rises, Texas buyers are recalibrating capital strategy. Cash still carries negotiating strength — but financing is no longer a competitive disadvantage.

For borrowers and investors across Houston, Dallas, San Antonio, and Austin, the opportunity lies in:

·Structuring smart leverage

·Preserving liquidity

·Negotiating from discipline — not desperation

If you're evaluating whether to deploy cash or finance your next Texas property, the decision should be strategic — not emotional.

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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory