Down Payment Source and Home Sales : Evidence from the American Housing Survey

A decrease in home values should make the purchase of new homes attractive to potential buyers. However, many home buyers rely on the sale of a previous home for the down payment on their new purchase. The decline in home prices between 2005 and 2009 is associated with a 40.0% reduction in the number of recent home purchases funded with a down payment obtained through the sale of a prior residence. This accounts for around 90% of the decline in the number of recent home purchases by individuals who had previously owned a home