At 16 percent of all new-home closings, cash remained the single largest source of funding for new homes in 2012, but the cash share declined for the first time since the housing downturn began in 2007. The share of cash transactions of new homes peaked in 2010–11 at more than 20 percent of all new-home closings in the United States. The decline likely reflects the fact that more traditional buyers who utilize financing are coming back into the market. The decline also coincides with an increase in the average price of new homes.
Government- or GSE-backed mortgages dominated new-home purchases with only 3 percent collectively funded by private or non-conforming loans. Federal Housing Administration and VA loans have risen in importance and together currently make up more than one-third of new-home mortgages.
Top lenders include Wells Fargo, Bank of America, and USAA, but five of the top 10—and four of the top five—are captive mortgage companies of the public builders. These captive mortgage companies provide a competitive advantage to the public builders, adding to their other advantages such as access to public capital, national purchasing scale, and consumer brand recognition.