What makes you think that the cash sales weren't to U.S. citizens? Plenty of U.S. citizens are buying with all cash.
Beyond that, though, why should U.S. citizens have the first options on those homes? I can't think of any. Let's suppose you're a seller. You put your property on the market for $200,000. You receive an all-cash offer from a U.S. citizen for $195,000. You receive an all-cash offer from a non-citizen for $196,000. You receive an offer from a U.S. citizen for $185,000, FHA financing, with you paying 3% of the closing costs. Which would you take? Probably one of the cash offers.
Let's extend the scenario. Suppose Congress passes a law saying that a U.S. seller must give preference to a U.S. buyer if the U.S. buyer's offer is within 10% of the best non-U.S. buyer offer. So if a non-citizen offers $196,000, you'd be required to accept any U.S. buyer's offer if it's over $176,400. How would you like it, being forced to accept a weak offer at $185,000 (or less) and not being allowed to take a stronger offer at $196,000?
Let's extend the scenario. It's not your house; it's your neighbor's. Your neighbor is forced to accept the lower offer from a U.S. citizen, not the higher offer from a non-citizen. Now, when you're interested in selling, the comps are in the range of $185,000 . . . because that's what your neighbors were forced to sell for. If the best offer had prevailed, the comps would come in at $196,000. How would you feel about being stuck with low comps?
So, no. I don't agree that U.S. citizens should have the first option on homes.