First-time buyers accounted for a record-low 24% of the market, according to a new report from the National Association of Realtors.
There have never been as few first-time buyers in the housing market, and the typical first-time buyer has never been as old as they are now. First-time buyers accounted for a record-low 24% of the market between July 2023 and June of this year, with housing affordability continuing to create significant barriers for those folks.
The median age for first-time buyers also hit a record of 38, up from 35 last year and 33 five years ago.on existing-home sales showed the typical home price is now $404,500, which is nearly a 50% increase over the same period five years ago.have shot up to between 6.5% and 7%. A 30-year fixed-rate mortgage cost about 3.7% during the same period five years ago. “First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers,” Jessica Lautz, NAR’s deputy chief economist and vice president of research, said in a news release.said the gap between the haves and the have-nots in the housing market has grown wider in the last several years.But for a lot of people still stuck on the sidelines, homeownership has increasingly become out of reach, according to experts. Home sales volume has been down around 4 million a year, which is sluggish compared to a typically healthy market pace of about 6 million home sales a year.Ostrowski said he doesn’t see much relief coming down the pike for home buyers.Inflation has cooled enough to allow the Fed to start moving rates in the other direction, with cuts already in September and again this month. But Ostrowski said mortgage rates don’t move in lockstep with the Fed’s benchmark interest rate the way some other consumer borrowing rates do, such as credit card rates., which could stay high with no sign the U.S. government is going to reduce its debt. That competition for investor dollars could keep upward pressure on mortgage rates. Meanwhile, demand for housing could remain robust compared to the limited supply, with a big generation of millennials in search of a place of their own, Ostrowski said. Home buyers overall, not just first-time buyers, hit an all-time high of 56-years-old, according to the new NAR report.And the typical home buyer’s median household income rose to $108,800 from $107,000 in the previous year. First-time buyers had a median household income of $97,000, up from $95,900 the prior year and an increase of $26,000 in the last two years. A record 26% of home buyers paid cash for their house, reinforcing the notion that people with wealth or equity are much better off in the current housing market. And 17% of home buyers purchased a multigenerational home. Again, that’s a record in NAR’s tracking and reinforces the challenges of home affordability.
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