US Housing Market Slows Down as Initial Home Payments Get Smaller
- Author: Aubrey Sipes
- Posted: 2025-06-18
For the first time in nearly two years since June 2023, we saw this number go down about 1% in April 2025, as mentioned in a report from Redfin, a real estate company.
How Much Less Are People Paying Upfront?
Right now, the common amount paid upfront for a home is 15%, just a bit lower than last year’s 15.1%. The typical upfront payment is now $62,468, which is a decrease of 0.8% from April 2024.
Initial payments—or the money paid in advance when you buy a home—had climbed along with other expenses like mortgage rates, home insurance fees, and property taxes over the past five years.
Before the pandemic, buyers usually paid about 10% upfront, but for the last four years, this has been around 15%. The exception was early 2023 when it briefly dropped back near 10%.
Back then, these upfront payments shrank because the prices of homes were also reducing. It was a short period of relaxation after a string of intense competition and price hikes in the housing market due to a buying rush brought on by the pandemic. Prices hadn't seen a year-over-year drop before that point.
While home prices are still on the rise currently, the Redfin report shows a moderate increase of 1.4% from the previous year in April 2025.
What's Behind the Drop in Initial Payments?
Even though home costs are not decreasing, the rate of their increase has relaxed quite a bit compared to the surge we saw previously. For example, price escalation in April was 1.4% over the previous year, whereas, in 2024, the increase around the same time was about 4%.
Several factors contribute to the reduced initial payments. Redfin notes that almost a third (30.7%) of home purchases are paid entirely in cash, meaning no initial payment is necessary. Furthermore, a small rise in buyers using Federal Housing Administration (FHA) and Veterans Affairs (VA) loans suggests that some are required to pay less upfront.
The FHA loans, government-insured, need only a 3.5% upfront payment from buyers, often those with a modest income. VA loans are government-backed too, helping veterans, active service members, and their widows to buy homes often without needing any initial payment.
Redfin also speculates that people might opt for less expensive homes, leading to smaller upfront payments in dollar figures. Concerns over costs and uncertainty in the economy might push buyers to be cautious and seek more affordable options.
Where Do People Pay the Most and Least Upfront?
Looking at April 2025, homebuyers paid the most upfront in some California areas like San Francisco, Anaheim, and San Jose—25% of the home's price.
However, areas like Virginia Beach (1.8%), Detroit (5%), and Jacksonville (5.4%) saw some of the lowest upfront payments.
In fact, Jacksonville was among the cities with the largest drops in initial payments, alongside Orlando and Tampa in Florida.
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