Redfin reports lowest U.S. homebuyer's down payment in 2 years

The average U.S. homebuyer s down payment fell to its lowest level in two years in January, according to Redfin's latest report.

The real testate brokerage reported that down payments dropped 10% year over year to $42,375 as the market cooled.

The median down payment was down 35% from June peak, but it's still up more than 30% higher compared to pre-pandemic levels.

14.5% of the population are in the U.S.

A positive outcome of high mortgage rates and economic turmoil is that it has cultivated slow competition, according to Redfin senior economist Sheharyar Bokhari.

Bokhari said that buyers are able to purchase a home without having to worry about a bid war and don't have to fork over a huge portion of their savings for a down payment to grab sellers attention.

Home offers written by Redfin agents aren't facing any bidding wars, according to the brokerage.

It's quite a difference from the hyper-competitive housing market we saw in 2021 and 2022, according to Redfin.

The company said that buyers can offer an amount that works best for their individual circumstances now that they have the upper hand.

With less competition, more buyers are allowed to use Federal Housing Administration FHA and Veterans Affairs VA loans, which can help keep down payments lower, according to the agency.

Inflation, mortgage rates and high home prices are still hitting budgets hard. The 30-year fixed-mortgage rate, according to mortgage buyer Freddie Mac, fell slightly to 6.6% as of March 16. That's down from the 6.7% reported the week prior and the two-decade high of 7.08% in the fall.

Buyers don't have as much money to allocate to a down payment because monthly housing payments are higher than before, so they may be putting more cash toward a mortgage-rate buydown instead of their down payment, according to Redfin.

The brokerage said that buyers may be more eager to hold onto as much cash as possible because of concerns over the uncertain economy.

The home prices are still stubbornly high, but they have fallen more than 10% from their peak in May 2022. They are down 1.5% from a year ago, Redfin.