Why First-Time Homebuyers Now Make Up Just 20% of the Market

By Jeff Hernandez, Realtor & Attorney — The Connie Colla Group at RETSY

For decades, first-time homebuyers powered the housing ladder. That has changed. First-time homebuyers now make up only 21% of all home purchasers, with a median age of 40 years old.

Why does it matter? Because delayed entry slows wealth-building and reduces market mobility. And it’s not just age and share—first-time homebuyer down payments hit a 10% median (highest since 1989), with most drawing on savings and some on financial assets or family gifts.

Why Fewer Homebuyers Are Taking the Leap

1. Tight Inventory and Elevated Prices 

Supply hasn’t kept pace with demand, especially at entry price points. Builders have been leaning toward higher-end products, and existing owners are staying put longer due to housing prices and locked-in lower interest rates. 

2. High Borrowing Costs and Total Monthly Payments

Mortgage rates stayed in the mid-6% to low-7% range in 2025, and the typical monthly payment was around $3,400 for first-time homebuyers with 9% down payment.

3. Ownership Costs Consuming a Bigger Share of Income 

By one widely cited gauge, the annual cost of owning a median-priced home consumed 47% of median household income in July 2025, far above the 30% affordability rule of thumb.

4. Later Life Milestones and Longer Stays 

Homesellers’ median tenure is 11 years means fewer turnover opportunities for entry homebuyers, while younger homebuyers often delay major purchases to build savings and reduce debt. 

Pro Tip: If you’re within 12–24 months of homebuying, start “de-risking” now: price out several loan types with a lender, create an automated down-payment savings plan, and track local months-of-inventory to time your search when selection improves.

The Ripple Effect on the Market

When first-time homebuyers shrink as a share of purchasers, it has a ripple effect on the market. Fewer entry-level sales mean fewer move-up opportunities and less overall fluidity. The National Association of Realtors also warns that delaying ownership can significantly reduce long-term equity gains, reinforcing wealth gaps.

Pro Tip: Consider “value pockets” near your target neighborhood—often a 10–20 minute drive expands options dramatically without sacrificing lifestyle goals.

What First-Time Homebuyers Can Do Right Now

• Get Pre-Approved Early: A full underwrite with a lender strengthens your offer and surfaces any credit or debt-to-income issues before you shop.
• Widen Your Search Radius or Product Type: Townhomes, condos, and older homes can be better overall choices as first homes.
• Leverage Programs Built For You: Explore FHA/VA and local home-buying assistance programs; pair with a lender who actively closes these loans.
• Work with an experienced agent: In 2025, 88% of homebuyers used an agent; 91% of home sellers did too. Expertise, negotiation, and contract precision matter in tight markets.

Pro Tip: Ask your agent for a “contract risk review” walk-through before you make an offer.  Earnest money, contingencies, and timelines should fit your risk tolerance and financing plan.

Conclusion

The record-low 21% share of first-time buyers and the median age of 40 reflect a market where affordability, supply, and financing costs are redefining the path to ownership. Still, with planning and professional guidance, well-prepared buyers can succeed. 

For trusted representation that unites legal precision, market insight, and white-glove service, partner with Jeff Hernandez, Esq., Scottsdale Real Estate Agent & Attorney — a Forbes Global Properties professional with The Connie Colla Group at RETSY.