Despite rising home prices, the typical U.S. homebuyer’s down payment shrunk by 1% in April compared with a year ago, according to a report from Redfin.
The average down payment, as of the end of April, is around $62,468, according to the firm’s data. It’s the first annual decline in nearly two years.
In percentage terms, the typical U.S. homebuyer puts down 15% of the purchase price, essentially unchanged from 15.1% a year earlier.
The median down payment has been around 15% for the last four years, dipping into the 10% range in early 2023.
Before the pandemic, the typical down payment was around 10%.
The last time dollar-amount down payments fell year over year was in summer 2023, when home-sale prices were falling, Redfin says. At that time, the decline in home prices was the main reason down payments were falling: when prices are lower, the percentage buyers put down is lower.
Now, home prices are rising; they increased 1.4% year over year in April. But home-price growth is slowing: for comparison, prices were up roughly 4% at this time in 2024. Slowing price growth is one contributor to lower down payments.
Down payments are falling in dollar terms even though overall home prices are rising slightly because not all homebuyers make a down payment; nearly one-third of buyers pay in all cash, the firm explains.
It’s likely that the people buying homes with a mortgage bought cheaper homes, reducing down payments. That also explains why down payments stayed flat in percentage terms but declined in dollar terms, the firm says.
Down-payment percentages were highest in three California metros: San Francisco, Anaheim and San Jose, all places where the typical homebuyer put down 25% of the purchase price.
They were lowest in Virginia Beach, Va. (1.8%), Detroit (5%) and Jacksonville, Fla. (5.4%).
Just under one in three (30.7%) home sales were all cash in April, down slightly from 31.6% a year earlier, Redfin says.
The share of buyers paying in cash peaked at nearly 35% in 2023 because mortgage rates peaked at nearly 8% during that time. Buyers were inclined to pay in cash — if they could afford it — in an attempt to avoid high monthly interest payments.
Mortgage rates are now in the high-6% range, slightly pushing down the share of buyers paying in cash.
All-cash home purchases were most prevalent in Cleveland and West Palm Beach, Fla., where roughly half of homes were bought in cash.
Next came Jacksonville, Fla. and Miami, both places where about 40% of homes were bought in cash.
Photo: Alexander Grey