The share of first-time buyers declined last month, as the competition for homes appears to be easing up. First-time buyers have struggled to compete for homes as bidding wars have sent prices surging. Housing inventories are increasing but still, newcomers appear skittish.
The number of first-time buyers coming to the total existing-home sales market declined to 29% in August, down from 33% a year earlier, the National Association of REALTORS® reports. Before the pandemic, in 2019, the share of first-time buyers averaged 32%.
“A variety of factors are causing buyers to step away: lack of affordable homes, especially at price points below $250,000 … lack of financial resources to meet the down payment requirements … and competition with cash buyers,” Gay Cororaton, an NAR research economist, writes for the association’s Economists’ Outlook blog.
Single-family homes priced at $250,000 or below comprised 29% of single-family existing-home sales in 2021 compared to 38% in 2020, according to NAR’s data. Also, many buyers found they were priced out in finding enough savings to buy too. A median 10% down payment is $52,000 and then 5% is generally needed in closing costs on a $350,000 home.
Competition from cash sales also continued to hamper first-time buyers’ entrance into the market. Cash sales accounted for 22% of existing-home sales compared to 18% in 2020.