Summer pullback in mortgage rates helped pave way for lower down
payments for many homebuyers
Send a link to a friend
[October 31, 2024] By
ALEX VEIGA
LOS ANGELES (AP) — Homebuyers opted to make smaller down payments this
summer as declining mortgage rates helped boost their purchasing power,
though home shoppers’ upfront costs remain near their peak.
The average down payment on a U.S. home as a percentage of the purchase
price was 14.5% in the June-September period, down from 14.7% a year
earlier, according to data from Realtor.com.
The median down payment nationally was $30,319, just 0.4% below what it
was in the third quarter last year.
Both trends also eased from the all-time highs set in the April-June
quarter. In that period, the average down payment as a share of the
purchase price climbed nationally to 14.9%, while the median down
payment rose to $32,659.
Years of rising home prices and mortgage rates have made homeownership
less affordable for many Americans. Larger down payments reduce the
amount that homebuyers have to finance, which lowers the monthly
mortgage payment.
But saving up enough to buy a home can be particularly challenging for
first-time homebuyers who don’t have any home equity to put toward their
down payment. It’s one reason they accounted for just 26% of all homes
sold last month, according to the National Association of Realtors.
[to top of second column] |
That matched the all-time low from
August. First-time homebuyers have accounted for 40% of sales
historically.
Down payment dollar amounts fell in 21 states in the third quarter,
according to Realtor.com. The biggest decline was in Florida, where
the median down payment fell 24% from a year earlier to $27,000.
Texas was second, down 23.2% to $14,400, followed by Wyoming, down
22.3% to $25,200.
Among the states where down payments increased in the third quarter
were Rhode Island, up 33.3% to $60,400; Delaware, up 32.8% to
$53,600; and, Wisconsin, up 25.2% to $35,500.
It’s too early to tell whether down payments will generally ease
from here. The average rate on a 30-year mortgage fell in late
September to 6.08% — its lowest level in two years — it's climbed in
recent weeks to its highest level in nearly three months. At the
same time, home prices have kept rising, albeit at a slower rate.
Economists predict mortgage rates will remain choppy this year, but
generally forecast them to ease in 2025. That should help expand how
much home shoppers can afford, giving them more flexibility on the
size of their down payment, but also could lead to higher home
prices if more buyers enter the market.
All contents © copyright 2024 Associated Press. All rights reserved |