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Although we're in the midst of a market correction, the future of the housing market is still up in the air—with many questions centering around first-time homebuyers.
While there are still individuals embarking on the journey of first-time homeownership, it's less than what we've seen in the past. Recent data from the National Association of REALTORS®' (NAR) Profile of Home Buyers and Sellers indicated that the annual share of first-time buyers was 32% in 2023. While this is up from 26% in 2022, it's still down from the 38% high seen in 1981.
Not only this, but the average age of a first-time homebuyer is much older than historical averages. According to NAR's Profile of Home Buyers and Sellers, the typical first-time buyer was 35 years old, ranging toward the older end of the millennial generation.
To gain further insight into what's keeping younger generations from stepping into first-time homeownership, we asked a few economists to weigh in on the following question.
"While there was an increase in the first-time buyers' annual share last year, these buyers were wealthier than first-time buyers have been in past years," said Jessica Lautz, Deputy Chief Economist and Vice President of Research, NAR. "There is a need for increased affordable housing inventory to bring in young buyers at all income levels. Homebuyers may have more opportunities in 2024 as mortgage interest rates have declined, which opens up the credit box for consumers. However, the total cost of housing needs to be taken into account, and home prices have risen amid the dearth of housing inventory."