US Home Down Payments Fall for First Time in 2 Years

Sellers are now willing to accept lower down payments in a bid to offload their homes.

A “For Sale” sign is posted in front of a home in San Anselmo, Calif., on March 22, 2023. Justin Sullivan/Getty Images

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.

Construction Decline

Amid high home prices and mortgage rates, housing starts fell 9.8 percent in May from the previous month, the Census Bureau said in a June 18 statement. Housing starts last month declined to their lowest level since July 2024. Meanwhile, building permits declined by 2 percent.

In a June 18 statement, real estate marketplace Zillow said that “fewer building permits suggest that the total number of homes started in 2025 could fall behind last year’s total.”

“Despite lower mortgage rates relative to year-ago levels, builders pumped the brakes on new projects this year. New home sales in April were still higher than in the same period last year. But just like with other sectors, economic uncertainty and a weaker labor market could cause demand to soften,” it said.

The National Association of Home Builders (NAHB) said in a June 18 statement that overall housing starts fell in May due to a “sharp decline” in multifamily construction.

Single-family starts essentially remained flat due to “economic and tariff uncertainty along with elevated interest rates,” it said.

NAHB Chief Economist Robert Dietz said the spring housing market has been a disappointing one, with challenging housing affordability conditions and higher construction costs.

The organization is forecasting the year to end with a decline in single-family housing starts, he added.

“Our latest builder survey shows that development and market conditions remain a major concern for builders, with consumer confidence lower and elevated interest rates for buyers and builders,” said NAHB chairman Buddy Hughes.

“Almost 40 percent of home builders reduced sales prices in the last month in order to offset difficult housing affordability conditions.”