In response to Redfin, the standard U.S. homebuyer’s down fee hit the best degree in over a decade, at 18.6 p.c of the acquisition value in June, up from 15 p.c the earlier yr.
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The common down fee for U.S. homebuyers has reached unprecedented ranges, outpacing elevated residence costs pushed by the present market situations, based on a Redfin evaluation launched on Wednesday.
In June, the median down fee soared to a report $67,500, a 14.8 p.c enhance from $58,788 the earlier yr. This marks the twelfth consecutive month of year-over-year progress in median down funds.
Down funds have grown quicker than residence costs, which had been up 4 p.c yr over yr in June. This pattern is probably going attributable to present market situations, together with the probability of higher-priced, move-in-ready houses in fascinating neighborhoods to promote extra typically in addition to the elevated frequency of patrons placing down a bigger share of the acquisition value upfront.
“Investors continue to make all-cash offers on homes needing renovation, while traditional buyers are increasing their down payments to reduce mortgage costs,” Annie Foushee, a Redfin agent in Denver, mentioned. “Many of these buyers are also getting financial support from family to afford larger down payments.”
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In response to Redfin, the standard U.S. homebuyer’s down fee hit the best degree in over a decade in June, at 18.6 p.c of the acquisition value, up from 15 p.c the earlier yr. Almost 60 p.c of homebuyers had been placing down 10 p.c of the acquisition value upfront, a rise from 56.6 p.c the earlier yr.
Among the many 40 largest U.S. metros, San Francisco had the best median down fee, equating to 25.8 p.c of the acquisition value, based on Redfin information. Conversely, down fee percentages had been lowest in Virginia Seashore, Florida, at simply 3 p.c of the acquisition value.
Redfin attributes the rise in down funds to rising residence costs, elevated mortgage charges and will increase in residence fairness.
Dwelling costs
The median-priced U.S. residence climbed to $442,525 in June, up 4 p.c yr over yr.
Elevated mortgage charges
Greater mortgage charges have incentivized patrons to make bigger down funds to scale back the quantity borrowed. The common mortgage price of 6.92 p.c in June pushed patrons to extend their down funds to be able to decrease their month-to-month funds.
Elevated residence fairness
Householders who bought their earlier property for greater than they paid had been in a position to make use of the additional fairness for bigger down funds on new houses. All-cash residence purchases have additionally seen a slight enhance, whereas FHA loans have dropped to their lowest degree in almost two years.
In June, the share of money purchases rose to 30.7 p.c, up from 30.4 p.c the earlier yr.
“The percentage of all-cash sales typically mirrors the fluctuations in mortgage rates. When rates are low, all-cash sales decline, and they rise when rates go up,” Redfin Senior Economist Sheharyar Bokhari mentioned. “We might see all-cash purchases stabilize now that mortgage rates have started to decrease from recent highs.”
Pittsburgh, Pennsylvania, noticed the biggest enhance in all-cash residence purchases, with 28.6 p.c of houses purchased with money, up from 19.2 p.c in 2023. New Brunswick, New Jersey, adopted with 36.8 p.c of money purchases, up from 31.1 p.c the earlier yr.
FHA loans made up 13.7 p.c of mortgaged U.S. residence gross sales in June, the smallest share since August 2022, and down from 14.9 p.c a yr earlier. Redfin attributes this decline to near-record-high residence costs and rising mortgage charges, which have made affordability tougher for patrons who usually benefit from FHA loans’ extra favorable and inexpensive phrases.
