Home prices drive up down payments in December MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

 As home prices rise, down payments are also getting bigger. In December, the average down payment was sixteen point three percent of the purchase price of a home, up from fifteen percent in 2023, according to a new Redfin report. That equates to $63,188, which is a seven point five percent increase from the previous year, marking the largest increase in five months. To determine the typical down payment, Redfin analyzed records across forty of the country’s most populous metro areas.

 Redfin attributes the higher down payment amount from last year to higher home prices which mean bigger deposits for buyers.
In December, the median home-sale price was $428,000, up six point three percent from the previous year. Additionally, the percentage being put down by buyers is high because of elevated mortgage rates, Redfin said, also noting some buyers are putting down more to help bring down monthly interest payments. Redfin senior economist Sheharyar Bokhari said while a larger down payment can lower monthly mortgage payments and help strengthen an offer in a bidding war, bigger isn’t always better.

 “Housing markets in much of the country have started tilting in buyers’ favor, allowing buyers to set the terms they want,” Bokhari said. “That means house hunters don’t necessarily need to break the bank for a huge down payment if it makes more financial sense to save some money for things like future home renovations or other investments.” The report also found fewer homebuyers are paying cash than they were a year ago. In December, three in ten homes, about thirty percent, were purchased with cash, down from thirty three point eight percent in 2024, but up from the three-year low of twenty eight point six percent in September.

 In 2024, thirty two point six percent of home sales were made in cash, the lowest in three years. The report noted the number of cash buyers peaked in 2023 when mortgage rates peaked, marking a near-two-decade high of nearly eight percent. “Buyers who can afford to pay with cash are more inclined to do so when rates are high because they’re avoiding high monthly interest payments, and saving money in the long run,” the report said.

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