Story at a glance
- A new report from the real estate company Redfin analyzed county data from the 40 most populous U.S. cities.
- After reaching a nine-year high in May of 18 percent of a home’s purchase price, median down payments dipped slightly to 15.2 percent in July.
- But percentages in July were still up by 10 percent from pre-pandemic levels.
The average down payment for a home nearly doubled from pre-pandemic levels this summer due to skyrocketing prices in intense competition, according to a new analysis.
A report from the real estate company Redfin analyzing county data from the 40 most populous U.S. cities shows a typical homebuyer who took out a mortgage in July made a down payment of $62,500 – up from a median down payment of $32,917 in July 2019.
Median down payments surged during the pandemic as low interest rates and remote work pushed buyers into a market where prices were already high. Although prices are falling, median home prices are up 6.7 percent year-over-year at more than 406,000.
After reaching a nine-year high in May at 18 percent of a home’s purchase price, median down payments dipped slightly to 15.2 percent in July. But percentages in July were still up by 10 percent from pre-pandemic levels.
Year-over-year increases were highest in Nashville, where the typical down payment rose by nearly 40 percent. The typical down payment in Nashville in July was $64,250.
Nashville is followed by Newark, N.J., where down payments increased by 36.4 percent from last year. Down payments in New York City were up by 34.8 percent, while New Brunswick, N.J., experienced a typical increase of 34.3 percent to $90,000.
Charlotte, N.C., rounds out the top five on the list. Here, the typical down payment reached $48,200, up 32.6 percent from the year before.
Prices, however, are cooling nationwide amid soaring mortgage interest rates, which reached a 16-year high last week at 6.75 percent. Combined with rising inflation, this has led to lower down payments since their peaks in May and June as well as July.
“Between higher mortgage rates creating higher monthly housing payments and inflation pushing up the prices of everything from food to fuel, buyers need to set aside more money for everyday expenses,” Redfin Senior Economist Sheharyar Bokhari said in the report.
“That, along with the slumping stock market, is cutting into down-payment budgets. While down payments will likely remain elevated above pre-pandemic levels, they’ll probably fall a bit in the short term,” Bokhari added.