The number of first-time home buyers has dropped to an all-time low over the past year as the average age of first-time homeowners is the highest it has been in over three decades.
Part of the reason many are being forced to wait before buying their first home is the combination of skyrocketing prices and high-interest rates, the National Association of Realtors shared in a new report.
First-time buyers made up just 26% of all homebuyers in the year ending June 2022. However, last year that group made up 34% of homebuyers, according to the report.
The number was the lowest recorded in the survey’s 41-year history, as the usual percentage was between 30% and 40% over the last decade. In 2009 the number reached as high as 50%.
Demographics for those buying homes for the first time have also changed over the last year, as the average age of those buying a house for the first time was 36 years old, up three years from last year, the report found. In addition, the category of those buying again also saw the average rise by three years, to 59 years old, compared to last year.
The report found that both were all-time highs.
The report noted that while home prices and mortgage rates both shot up throughout the last year, buyers’ income dropped, making it too expensive for many to get into the market.
According to the report, the median household income for first-time buyers fell to $71,000, while in the previous year, it was $86,500. For repeat buyers, the median income was $96,000, and the year prior, it was $112,500.
Jessica Lautz, the vice president of demographics and behavioral insights for NAR, noted that people wanted to get into homes; they just couldn’t afford it.
“For first-time homebuyers, the lack of affordability is playing a key role in holding them back from homeownership,” Lautz said. “They don’t have the equity that repeat buyers have for a down payment or to buy in cash. They have to save while paying more for rent, as well as student debt, child care and other expenses, and this year were facing increasing home prices while mortgage rates are also climbing.”
Other demographics that saw a decline in homeownership were people of color, as fewer Black and Asian homebuyers fell throughout the year, according to the report. The report also found the share of White and Hispanic home buyers grew.
During the year ending in June, 88% of buyers were White, up from 82% last year, and 8% were Hispanic, up 7%. At the same time, 3% were Black, and 2% were Asian, both dropping from 6% last year.
Experts say that if the markets don’t change, then the racial divide in homeownership could continue, and those who want to enter the market will have to continue to wait.
“We have been talking about the impacts, but this year we are seeing it realized in the data,” Lautz said. “Unless we have substantial homebuilding at affordable prices, we will continue to see first-time homebuyers held back.”
Related
Related
