The housing market in the United States has recently undergone significant changes, particularly affecting first-time homebuyers. In 2024, the proportion of home purchases made by first-time buyers dropped to a record low of 24% of all purchases, as reported by the National Association of Realtors (NAR). This marks a noticeable decline from the previous year, where first-time buyers accounted for 31% of home purchases. The trend reveals a stark shift from the average of 33% during Donald Trump’s presidency, prompting concerns about accessibility for young Americans attempting to enter the housing market.
A contributing factor to this decline is the rising median age of first-time buyers, which increased from 35 to 38 years old within a year. This rise suggests that it is becoming increasingly challenging for younger families to secure home ownership as inflation in housing prices and escalating living costs continue to pose barriers. Historically, the median age for first-time buyers during Trump’s administration hovered around 33 years, indicating that potential buyers are not only older but likely face greater financial hurdles than previous generations.
Jessica Lautz, the deputy chief economist and vice president of research at NAR, highlights a duality in the current housing market. On one side are the struggling first-time buyers, grappling with exorbitant home prices and high mortgage rates in an environment characterized by limited housing inventory. On the other side, current homeowners are leveraging their accumulated home equity for cash purchases or substantial down payments for new homes. This divide illustrates the stark inequalities within the market, as first-time buyers are increasingly older and earning significantly more than their predecessors, yet still find themselves unable to access the market due to economic conditions.
The home affordability crisis has emerged as a pressing concern, particularly among younger people who express dissatisfaction with the economy as a result. The frustration stems from the escalating median home prices, which have surged by 24% since Joe Biden took office. The inability of young families to secure affordable housing is increasingly recognized as a critical issue, with surveys indicating that it significantly contributes to their overall economic discontent.
Compounding these challenges is the dramatic increase in mortgage interest rates. Prior to the pandemic, the average 30-year fixed mortgage rate stood at an attractive 3.6%. However, this figure has ballooned to 6.72% as the Federal Reserve raised interest rates to combat other economic issues. The juxtaposition of soaring home prices and heightened mortgage rates creates a perfect storm that effectively distances the prospect of homeownership from a significant portion of the population, especially younger buyers who aspire to create stable family foundations.
In summary, the latest developments within the U.S. housing market reveal a troubling trend for first-time buyers, marked by record low participation rates in home purchases and rising entry barriers due to high prices, increased age, and elevated mortgage rates. With young families struggling to attain their own homes, the implications of the current housing landscape raise questions about the economic stability and futures of these individuals. As these dynamics continue to unfold, the divide in access to homeownership could have broader societal repercussions, necessitating attention from policymakers and industry stakeholders to address these pressing issues.