The median first-time homebuyer has reached an all-time high of 38 years old – three years older than in July 2023, according to the National Association of Realtors’ 2024 Profile of Home Buyers and Sellers report. This summer, NAR polled 5,390 buyers who purchased primary residences between July 2023 and June 2024. In the 1980s, the typical first-time home buyer was in their late 20s.
Additionally, the share of first-time homebuyers on the market decreased over the past year from 32% to 24%, the lowest since NAR began collecting data in 1981.
Factors including the nationwide housing shortage, competition against wealthier buyers and high rent prices make it more difficult for younger adults to buy their first home, according to experts.
The Housing Shortage
According to the NAR, as of mid-2023, there’s a housing shortage of 4 million homes. Construction of new homes has been slow in recent years, and more buyers are competing for available homes, pushing up prices.
Though, recently, building activity has somewhat improved. Single-family housing starts in the U.S., a measure of new homes that began construction, grew to 1,027,000 in September, according to U.S. Census data. That is a 2.7% jump from August.
Yet, we are still in a constrained market. And, as mentioned, because of fewer homes available, there is more pressure on home prices.
The Winners in Today’s Housing Market: Repeat Homebuyers or Sellers
The housing market is dominated by repeat homebuyers and sellers, or those who’ve owned and sold homes more than once. Prior homeownership gives them access to home equity to tap – which, in some cases, is enough to buy homes outright.
About a quarter, or 26%, of homebuyers paid cash for their home, an all-time high for cash buyers, NAR found.
U.S. homeowners with mortgages have a net homeowner equity of over $17.6 trillion in the second quarter of 2024, according to CoreLogic. Home equity increased in the second quarter of this year by $1.3 trillion, an 8% growth from a year prior.
The typical repeat homebuyer is now 61 years old, and sellers are typically 63, per the same NAR report.
High Rent Prices
Other factors like high rent costs and elevated debt-to-income ratios make it hard for would-be buyers to save for a home, experts say.
Rent prices increased faster than tenants’ wages during the COVID pandemic. In 2022, rent growth peaked at 16% at an annual basis. That same year, wage growth peaked at 9.3%, according to data from Indeed.
The price jump meant the typical renter spent about 31% of their income on rent. About half of renter households were “cost burdened,” meaning they spent more than 30% of their income on housing.
High rent prices not only affect an individual’s ability to save money to buy a home, but it can affect an individual’s ability to pay down any existing debt. In turn, that influences debt-to-income ratios, an important factor when qualifying for a mortgage. All of these factors snowball, especially in an inflationary environment.
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