First-time homebuyers are now much older and comprised the lowest share of homebuyers since National Association of Realtors (NAR) records began over 40 years ago, as high interest rates and soaring home prices squeezed younger buyers out of the home market, the NAR reported Thursday.
Just 26% of all homebuyers were first-time purchasers in the 12 months ending June 2022, down from 34% in the 12 months that ended June 2021, the NAR reported. The typical age of first-time buyers was 36 years, a jump of three years from the previous survey, and the proportion of homes purchased in small towns and rural homes rose to record highs of 29% and 19% respectively as affordability concerns and remote work reduced demand for urban environments. (RELATED: The Housing Market Is About To Fall Off A Cliff, Economist Says)
“It’s not surprising that the share of first-time buyers shrank to the lowest level ever recorded given the housing market’s combination of historically low inventory, persistently high home prices and rapidly escalating interest rates,” said Jessica Lautz, NAR vice president of demographics and behavioral insights.
At just 26%, the share of first-time buyers was the lowest since NAR began tracking the data. The typical first-time buyer was 36 years old – an all-time high. #NARHBS
— NAR Research (@NAR_Research) November 3, 2022
The average rate for a 30-year fixed mortgage passed 7% last week but has since dipped slightly to 6.95%, Freddie Mac reported Thursday.
In the period of time measured by the NAR’s study, the median price of a home peaked at $413,800, as a lack of inventory increased competition for limited supply, CNN reported. The median price of a home was lower in September, at $384,000, but was still 8.4% higher than the September 2021, and housing sales declined for the eighth month in a row.
Black and Asian American homebuyers represented just 3% and 2% of homebuyers respectively, a decline from 6% for each group in the previous year, the NAR reported. White and Hispanic Americans accounted for 88% and 8% respectively, up from 82% and 7% one year ago.
“Housing affordability and limited inventory impacted the buying power of all buyers, however, the greatest impact was felt by Black and Asian Americans, as both groups saw a shrinking share of home buyers,” Lautz said. “Conversely, White and Hispanic Americans experienced gains in buyer shares. Population growth among Hispanic Americans likely drove the increase, while many White Americans are repeat buyers with housing equity that allows them to make easier trades in today’s market.”
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