First-Time Homebuyers Hit Historic Low of 24% Amid Soaring Unaffordability

The share of first-time homebuyers in the U.S. housing market has plummeted to a historic low of 24%, a significant decrease from previous years, according to data presented by Dr. Fairweather at the recent YIMBYTown conference. This unprecedented decline is primarily driven by widespread housing unaffordability, making homeownership increasingly challenging for new entrants.

"At #YIMBYTown, @FairweatherPhD shares data on how first-time homeowners are just 24% of homebuyers now, the first time it’s been this low. Driven by housing unaffordability," Saad Asad reported on social media.

The National Association of Realtors (NAR) corroborated this trend in its 2024 Profile of Home Buyers and Sellers, indicating that the first-time homebuyer market share decreased from 32% last year. This marks the lowest percentage recorded since the survey began in 1981, falling significantly below the historical average of 38%. The median age for first-time buyers has also risen to 38 years, up from 35 last year, reflecting the extended time it takes to enter the market.

Jessica Lautz, NAR deputy chief economist, highlighted the stark division in the current housing landscape. "The U.S. housing market is split into two groups: first-time buyers struggling to enter the market and current homeowners buying with cash," Lautz stated. First-time buyers contend with high home prices, elevated mortgage interest rates, and limited housing inventory, necessitating higher incomes and larger down payments than previous generations.

The median household income for first-time buyers reached $97,000 in 2023, an increase from $95,900 the prior year. Despite this, the median down payment for first-time homebuyers stood at 9% in 2024, the highest since 1997, with many relying on savings, loans, or gifts from family. This financial strain underscores the depth of the affordability crisis impacting aspiring homeowners across the nation.