Down payments see first annual decline in two years

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1. Down payments see first annual decline in two years

In April, the typical homebuyer put down $62,468, a 1% decline from a year earlier—the first annual drop in nearly two years. However, in percentage terms, down payments have held steady at around 15% of the purchase price, according to Redfin’s latest report on buyer financing trends. Here’s what else the April data shows:

• All-cash deals made up 30.7% of April home sales, down from 31.6% a year earlier. The highest shares were in Cleveland and West Palm Beach, both at 50.2%. The lowest were in Oakland (18.2%) and San Jose (18.3%).

• Conventional loans remained the dominant choice, used in 77.5% of mortgaged home purchases.

• Government-backed financing is gaining traction. FHA loans were used in 15.3% of mortgage-backed deals, up from 14.2% a year earlier. VA loans accounted for 7.2%—the highest April share since 2020.

2. Charted: From five years to eight: The growing burden of saving for a home

The rise in median home prices has outpaced that of median earnings, so saving for a down payment takes a lot longer than it used to.

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3. More Nuggets

🚨 Federal Reserve is likely to hold interest rates steady this week. Here’s what that means for your money. (CNBC)

📝 Realtor’com enters the Clear Cooperation debate. (Realtor.com)

💸 Cotality supports automated income assessment through integration with Freddie Mac’s AIM Check API. (Cotality)

🏘️ Low-fee brokerage firms could give sellers considerable savings. (CPC)

4. Homebuilder sentiment drops to 2-1/2-year low

Higher mortgage rates and uncertainty in the broader economy continue to weigh on consumers — and consequently on the nation’s homebuilders.

Builder sentiment in June dropped 2 points from May to 32 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Anything below 50 is considered negative. The index stood at 43 in June 2024.

5. Opendoor reaches $39M settlement in pricing algorithm lawsuit

Opendoor has agreed to a $39 million settlement to resolve investor claims it misled the public about its home pricing tech.

Filed in Arizona federal court, the deal—pending judicial approval—addresses allegations that Opendoor overstated the accuracy and autonomy of its AI-driven pricing algorithms.

Investors claimed the company, billed as a tech disruptor, actually relied heavily on human input and was vulnerable to market shifts. Opendoor denied wrongdoing but settled to avoid prolonged litigation. Plaintiffs called the deal a “substantial recovery”.

☀️ You’re all caught up. See you on Friday!

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