Sellers are now willing to accept lower down payments in a bid to offload their homes.
The typical down payment made by U.S. homebuyers fell 1 percent year-over-year to $62,468 in April, the first annual decline in almost two years, real estate brokerage Redfin said in a June 16 statement.
“The last time dollar-amount down payments fell year over year was in summer 2023, when home-sale prices were falling. 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,” the company said.
“Now, home prices are rising; they increased 1.4 percent year-over-year in April. But home-price growth is slowing: for comparison, prices were up roughly 4 percent at this time in 2024. Slowing price growth is one contributor to lower down payments.”
Despite the rise in home prices, down payments are declining in dollar terms because not all buyers purchasing a home are taking mortgages—almost a third of the buyers make an all-cash deal to purchase a property, the brokerage said.
Moreover, people could be buying cheaper homes with a mortgage, thus resulting in a lower down payment, which contributes to the dollar value of down payments declining, it said.
The move to cheaper homes is driven by high housing costs, with growing home prices and mortgage rates remaining near the 7 percent level.
The average weekly rate on a 30-year fixed-rate mortgage has remained above 6 percent for every single week since September 2022, data from Freddie Mac shows.
Since the beginning of the year, rates have consistently been above 6.6 percent. Some respite was seen over the past two weeks as rates fell from 6.89 to 6.84 percent.
In a June 18 statement, Freddie Mac chief economist Sam Khater said the 30-year fixed-rate mortgage rate has hit a four-week low.
“More available inventory to choose from, coupled with this week’s decline in mortgage rates, could be the spark to get potential homebuyers off the sidelines,” he said.
In addition to cooling rates, the overall housing market is also tilting in buyers’ favor, according to Redfin.
“Sellers in much of the country are willing to negotiate with buyers and give concessions. Some may also be willing to accept lower down payments—which may signal less financial security and a higher chance of the deal falling through—to offload their home,” the brokerage said.
