Down payments for home purchases in the US decreased in March amid a buyer-friendly market that's reducing pressure on prospective buyers to put down bigger amounts, a report by Redfin showed Tuesday.
The typical homebuyer's down payments fell 1.5% year over year to $64,000 in March, according to the online real estate brokerage. In percentage terms, it dropped to 15% from 16.1% a year earlier.
"Homebuyers are making smaller down payments due to cooling home-price growth, a rise in lower-down-payment loan products, and less pressure to compete in bidding wars," Redfin said. "The buyer-friendly market is reducing pressure on house hunters to make large down payments to strengthen offers in bidding wars."
Buyers are being more careful due to higher prices and are diverting funds from the "down payment bucket" towards closing costs or holding it for monthly payments, the report showed.
In terms of major metros, down payment percentages were highest in the California markets of San Jose, San Francisco, and Anaheim at 25% each, while those in affordable markets like Virginia Beach and Detroit put down 2% and 5%, respectively, the report showed.
In dollar terms, Nashville saw a 27% drop, followed by a 25.3% fall in Atlanta, while Cleveland posted the highest year-over-year gain with a 20.5% surge.
Still, down payments have essentially doubled in dollar terms since 2019 due to soaring home prices, according to the report.
"In percent terms, the typical down payment was 10% for many years pre-2020 before jumping during the pandemic homebuying frenzy and staying somewhat elevated since then," Redfin said.
Last month, a report by News Corp's (NWS, NWSA) Realtor.com showed that first-quarter down payment in the US reached its lowest level since 2021 as the housing market slowly shifts toward more buyer-friendly conditions.
Price: $30.02, Change: $-0.66, Percent Change: -2.15%
