In May, home buyers increased their down payment after stiff competition in the U.S. housing market, to reach a new record of $66,000, according to a new report.
A report from real-estate brokerage Redfin found that down payments hit a nine-year high in May, where the typical down payment was 18% of a home's purchase price.
In May and June, the typical buyer was putting down $66,000, according to Redfin.
Since then, that number has cooled a bit. Redfin said that the typical U.S. homebuyer who took out a mortgage in July 2022, made a $62,500 down payment.
That is up 13.6% from a year ago. The average down payment doubled, compared to the median amount people were putting down before the epidemic in July 2019 of $32,917.
Nearly 60% of buyers who had taken out a mortgage had put down more than 10% of their down payment, which was up from the 50% range before the epidemic.
The 5 cities where down payments increased the most.
The East Coast dominated the list, with the top five metros where down payments rose the most.
In Nashville, Tenn., down payment dollar amounts increased by nearly 40% from a year ago. The typical down payment was $64,250 in July.
That is followed by these four cities:
The typical down payment for Charlotte, N.C. was $48,200, up 32.6% from a year ago.
In a number of cities in the U.S., down payments fell.
In Riverside, Calif., the most down payments fell by 15.4% from a year ago, to $55,000.
In San Francisco, people were putting down less, at $364,000, down 7.8% from a year ago.
The typical home buyer in Denver was the most aggressive in terms of percentages, putting down 20% in July, according to Redfin.
The typical Denver buyer put down 15% a year ago.
Expect down payment amounts to come back down.
Down payments have decreased because of higher mortgage rates.
Higher monthly mortgage payments and the rising cost of other goods and services make it harder to come up with huge down payments, according to Redfin.
Redfin has added a feature that shows users' payment assistance information, attached to home listings, on its website. Potential home buyers can tap on programs in the area that will include for-sale listings on Redfin in the future.
But a slowing housing market means that people don't need large down payments to win bids on homes, according to Redfin.
Homebuyers don't need to make huge down payments anymore, because they're much less likely to encounter bidding wars now that so many Americans have bowed out of the market, Sheharyar Bokhari, senior economist at Redfin, said in a blog post.
He said that while down payments will likely remain above pre-pandemic levels, they ll probably fall a bit in the short term.