Published by REALTOR.com | November 13, 2023
Despite the myriad obstacles in their way, first-time buyers made up about a third of those purchasing homes to live in, according to the National Association of Realtors®
More first-time homebuyers have been successfully navigating the extremely pricey and challenging housing market.
Despite the myriad obstacles in their way, first-time buyers made up about a third of those purchasing homes to live in, according to the National Association of Realtors® 2023 Profile of Home Buyers and Sellers. They increased from 26% in the previous year to 32% this year.
“It’s encouraging that we’re seeing first-time buyers edge back into the market,” says Jessica Lautz, deputy chief economist at NAR. They got a bit of an edge in the market as mortgage rates rose and other less determined buyers dropped out—or were priced out.
“It’s likely that because there was less competition they stood a chance to have their offer accepted,” explains Lautz. However, she points out that their numbers are still depressed.
First-timers typically make up about 38% of buyers. However, they’re now grappling with historically high home prices, mortgage rates that briefly flirted with 8% this year, and a dearth of homes for sale. Saving up for a home has become even more onerous due to inflation, pricey rents, and the resumption of student loan payments.
The report is based on an NAR survey of 6,800 buyers who purchased primary homes between July 2022 and June 2023. Investment and vacation home purchases were excluded from this report. Income data is from 2022.
First-time buyers were generally better off financially than they were in past years. They had a $95,900 median household income over the past year—up about 35% from $71,000 in the previous year.
The reason for that big shift: Only those first-timers with higher incomes could afford to enter this real estate market. With home prices and mortgage rates so elevated, they needed the extra money to afford the larger down payments and monthly mortgage payments.
“You have to have a higher income to be able to afford the housing market,” says Lautz.
“It looks like they’re essentially cutting spending anywhere they can to save for a down payment,” says Lautz.
They’re borrowing against their 401(k) accounts, selling cryptocurrency, borrowing money from family and friends, and using tax refunds and gifts from family members to achieve homeownership.