What's Happening?
A recent analysis by Realtor.com reveals that the time required for a typical U.S. household to save for a home downpayment has improved in 2025. The report indicates that prospective buyers now need approximately
seven years of savings at the national average personal savings rate to accumulate a typical U.S. median downpayment. This marks a significant improvement from the 12-year average reported in 2022. Despite this progress, the current seven-year timeframe remains about double the pre-pandemic norm, highlighting ongoing challenges due to elevated downpayment amounts and lower savings rates. These factors continue to impact buyer capacity, especially for first-time and moderate-income households. The analysis assumes a 5.1% national savings rate and median household income data to estimate annual downpayment accrual. Geographic disparities are notable, with high-cost coastal metros requiring up to 35 years to save a competitive downpayment, while more affordable Southern metros offer timelines under five years.
Why It's Important?
The improvement in the downpayment savings timeline is significant for the U.S. housing market, as it suggests a potential easing of one of the key affordability barriers. However, the persistent challenges tied to high downpayment requirements and lower savings rates continue to affect buyer readiness, particularly for first-time and moderate-income buyers. This situation underscores the need for mortgage originators to educate clients on realistic savings horizons and explore financing options that can reduce upfront barriers. The regional disparities in savings timelines also highlight the varying market conditions across the country, which can influence where and how potential buyers can enter the housing market.
What's Next?
Mortgage originators and potential homebuyers will need to continue monitoring market conditions and savings trends. For originators, there is an ongoing need to provide clients with guidance on savings strategies and financing options that can help overcome affordability challenges. Buyers, particularly in high-cost areas, may need to consider alternative strategies or locations to achieve homeownership. Additionally, policymakers and industry stakeholders may need to address the underlying factors contributing to extended savings timelines, such as high home prices and low savings rates.
