Down Payments for Home Purchases Fell in Q1 From A Year Earlier

Real Estate Agent sells a house

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The average down payment for a house fell in the first quarter for the first time in two years as Americans have depleted savings and rising home prices and mortgage rates have kept more potential buyers out of the market.

The average down payment fell to 13% of the purchase price by the end of the first quarter, down from the peak of 14.1% in the second quarter of 2022, according to It's still 72% higher than the pre-pandemic first quarter of 2020.

Key Takeaways

  • Higher mortgage rates, elevated home prices and lower savings lead to a decrease in down payments on homes by the end of the first quarter of 2023.
  • Both the average and median down payments peaked in the second quarter of 2022.
  • Savings in the U.S. fell to 5.1% of earnings in March 2023 from 26.3% in March 2021.

By the end of 2022, Americans had less in savings, mortgage rates were still climbing and home prices were elevated, leading to a decrease in down payments, according to an analysis from Realtor.

Still, payments are elevated from pre-pandemic levels. The median down payment dollar amount was 71.8% higher in the first quarter of 2023 than it was in the first quarter of 2020. 

Even for secondary residences or investment properties, where down payments range from 27.2% to 26.7%, respectively, payments in the first quarter of 2023 were roughly double the typical share of down payments on primary residences. Those payments are three to four times larger than down payments for primary residences. 

Affordability conditions bring falling down payments

Buyers were still putting more money down over 2022 and the first quarter of 2023 than they were pre-pandemic, although the amount is beginning to drop again as Americans have less overall in savings.

Pandemic conditions, like limited travel, recreational spending and assistance from the federal government, allowed more Americans to funnel money into savings in 2020 and 2021. But as inflation and interest rates climbed in 2022, the market shifted, leading to lowered savings.

Savings in the U.S. fell to 5.1% of earnings in March 2023, a big drop compared to 26.3% in March 2021.

Because of a decline in affordability and less savings in Americans bank accounts, many buyers were likely priced out of the market, according to Realtor.

In 2022, buyers put an average of 13.6% down as a down payment, but by the end of the first quarter of 2023, buyers were paying an average of 13.0% down for their primary residence, roughly the same as the first quarter of 2022 and a 1.3% increase over the first quarter of 2021. 

Down payments started to show signs of slowing in the first quarter, with the median down payment decreasing in 16 states, and the median down payment amount decreasing in 33 states compared to the first quarter of 2022.

Given the 28.9% rise in median home sale prices in the first quarter from the first quarter of 2020, the sustained size of down payments since the second quarter peak of 2022 and the first quarter of 2023 is significant, according to Realtor. 

Paying larger down payments on already higher priced homes meant that buyers paid an average of 71.8% more as a down payment in the first quarter of 2023 at $24,100, compared with the average $14,000 they paid in the first quarter of 2020. The median down payment amount peaked in the second quarter of 2022, at $30,400.

Maine, Tennessee, South Carolina, Hawaii and Wyoming had the largest down payment growth in 2022. 

Idaho had the biggest decreases in down payments, both in percentage paid and dollar amount. Arizona, Nevada, Utah and Nebraska followed. 

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  1. Realtor, "Down Payments Fall From Recent Peak."

  2. FRED St. Louis Federal Reserve. "Personal Saving Rate."

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