Navigating the Homeownership Journey: A Strategic Approach to Down Payments
The Evolving Pace of Down Payment Accumulation for Americans
For the majority of Americans, accumulating sufficient funds for a down payment is a journey spanning several years. Recent data indicates that the average American now takes seven years to save for a median home down payment, a notable improvement from the 12 years recorded in 2022. However, this timeframe still represents nearly double the period required before the pandemic, a stark reminder of how soaring property values have made homeownership a more distant goal for many prospective buyers.
The Economic Implications of Prolonged Down Payment Savings
When the period required to save for an initial home investment extends, individuals often postpone their home purchase decisions, exposing them to the volatility of increasing rental costs. This delay also limits access to home equity, a crucial avenue for wealth building among Americans. On a broader scale, a slowdown in homeownership can suppress housing demand, construction activity, mortgage transactions, and even consumer spending related to relocation and home improvements, ultimately affecting economic vitality.
Shifting Dynamics: Lower Savings and Higher Home Prices Influence Down Payments
The report underscores that aspiring homeowners face increased difficulty in accumulating down payments due to a confluence of factors. Escalating home prices necessitate larger initial investments, while a reduced personal savings rate prolongs the time needed to amass these funds. The intersection of these trends creates a challenging environment for individuals striving to enter the housing market.
The Impact of Elevated Home Values and Decreased Savings on Market Entry
“The confluence of higher property valuations and intensified market competition has driven up the typical down payment amounts. Concurrently, inflationary pressures and increased household expenditures have led to a decline in savings rates,” noted Danielle Hale, chief economist at Realtor.com. Home values have seen a significant surge since the pandemic, with the S&P Case-Shiller home price index indicating a 55% increase between September 2019 and September 2025. Consequently, the average down payment has more than doubled in the same period, climbing from $13,900 to $30,400. Meanwhile, the U.S. personal savings rate in 2025 stood at 5.1% of income, markedly below the pre-pandemic average of approximately 6.5%.
Down Payment Proportions Reflect Market Realities
While housing finance experts commonly suggest an initial payment equivalent to 20% of a home's value, Realtor.com's analysis reveals that most purchasers do not meet this benchmark. Buyers in the third quarter of 2025 typically made down payments averaging 14.4% of the home price. Despite the significant increase in home prices, the proportion of the purchase price dedicated to a down payment has remained relatively stable, hovering around 14% since 2022. This consistency is largely attributed to the fact that only affluent buyers, who tend to make larger upfront payments, can afford the elevated housing costs.
Geographic Variations in Saving for a Home
The time required to save for a down payment varies considerably depending on the geographical location. More affordable markets typically demand smaller average down payments. Additionally, communities with a significant military presence often feature lower down payment requirements, particularly due to the availability of VA loans which frequently waive this prerequisite. For instance, a household in San Francisco with a median income might need over 36 years to save for that city's median down payment of $245,466. In contrast, a median-income household in San Antonio, Texas, or Virginia Beach, Virginia—both locations with substantial military populations—would only need one to two years to accumulate a local down payment.