Cash buyers are not necessarily interest rate insensitive. When I bought a house earlier this year, my lender advertised a cash offer program. They would by the house with cash on my behalf. Then, they would confirm they could give me the mortgage, and sell the house to me at the same time they give me the mortgage. This program wasn't available in my state, but might be common enough in others to skew the numbers.

Institutional (or rich) buyers have the option of buying the house in cash, then taking out a loan against the house. This gives them the benefit of being able to make an all cash offer, and the long term benefit of leveraged, low interest debt.