Housing down payments hit all-time high as buyers battle high mortgage rates
NAHB CEO Jim Tobin discusses the state of the housing market, American homeownership, and using family money for home down payment.
Americans are putting down a record amount of money in order to secure a new home as they continue to grapple with high mortgage rates and a worsening inventory shortage.
Down payments hit a new peak in the third quarter of 2023, as high borrowing costs and the competitive market drove buyers to make a bigger contribution, according to a new report published by Realtor.com.
Buyers put down $30,434 on average in the third quarter, according to the report, up 11.3% from the same time one year ago and a stunning 118% from four years ago.
The report also found the average down payment percentage hit 14.71% of the purchase price at the end of the third quarter, the highest level since Realtor.com began tracking the data in 2013. By comparison, the typical payment level before the COVID-19 pandemic began was about 11%.
HOME FORECLOSURES ARE ON THE UPSWING NATIONWIDE
Homes in Hercules, California, on Wednesday, Aug. 16, 2023. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
"As long as demand continues to outmatch supply, the housing market will stay competitive and down payments are likely to remain elevated," said Danielle Hale, Realtor.com chief economist. «Furthermore, tapping into existing savings or home equity to put a larger amount down on a home may also enable shoppers to minimize the sting of higher mortgage rates.»
The reason that buyers are making bigger down payments is two-fold. A bigger chunk of change upfront can help to reduce the size of a loan and offset the pain from higher mortgage rates, which spiked over the past year as a result of the
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