Realtor Magazine recently reported that fall and winter months may be the best time for buyers to purchase a home--the job market continues to warm up, mortgage rates are staying low, and home prices are stabilizing.

Historically, home price growth rises faster than wage growth, so despite temptation to strike while the iron is hot, many potential homebuyers can't take advantage of good buying conditions, because they're not able to afford the down payment. In fact, New York Federal Reserve Bank research economists Andreas Fuster and Basit Zafar addressed the "down-payment-trumps-interest-rates" phenomenon not long ago. As builders, the first step to help customers (especially first-time buyers) get through the lousy experience is to understand how bad the problem is.   

We’ve mashed up data from Metrostudy and the Census Bureau to probe how long it will take first-time home buyers to save up a 10% down payment on a new home, using 2015 median new home prices, 2014 median household incomes (the latest available), and median monthly rental costs in each state (because most people rent before actually buying a home). A widely accepted rule says people or households should spend no more than 28% of their gross income on total housing expenses, so by calculating how much of that 28% is spent on rent every month in each state, we've pinpointed the balance (whatever amount of money that is left, if any) that people could be contributing to a down-payment savings account each month. Note that we haven't taken cost-of-living into account, so the amount of income we've calculated that could be saved is actually higher than it would be for the average person paying for transportation, groceries, bills, etc., in addition to their rent.    

There are substantial discrepancies in median household income across the United States.  An average U.S. family needs nearly eight years to save a down payment, but a household earning the median income in Hawaii will need 26.79 years before they've saved enough money for the down payment on a home costing $565,100. Potential homebuyers in South Dakota will be able to save money for a down payment the quickest--3.46 years for a home costing $225,000. 

Keep in mind that this chart is based on state medians and only serves as a general reference. In reality, some homebuyers might not be able to find a home that lives up to their expectations and doesn't exceed the median home price in their state. Further, not all people can afford to make the “28%” commitment, considering other financial burdens caused by student loans, job changes, medical care, raising a child, or caring for an elderly. On the other hand, chances are that some home buyers, especially younger ones, receive help from family members to reach the down payment point earlier than shown in this chart. 

You can see the full data from our analysis here