The real estate market is experiencing a shift, as the average age of first-time homebuyers has reached an all-time high of 38 years old.

• According to the National Association of Realtors' 2024 Profile of Home Buyers and Sellers report, the median first-time homebuyer in 2024 was 38 years old.
• Experts say that low inventory, wealthy competitors, and high rent costs make it more challenging for first-time homebuyers.

First-time homebuyers in the U.S. are getting older.

The median age of first-time homebuyers has reached a record high of 38 years old, three years older than in July 2023, according to the National Association of Realtors' 2024 Profile of Home Buyers and Sellers report.

In the 1980s, the typical first-time buyer was in their late 20s.

According to Jessica Lautz, deputy chief economist at NAR, first-time homebuyers entering the market today are wealthier and older, and require bigger down payments due to higher home prices.

The share of first-time homebuyers on the market decreased from 32% to 24% in the past year, which is the lowest since NAR began collecting data in 1981.

Experts say that the nationwide housing shortage, competition from wealthier buyers, and high rent prices make it harder for younger adults to purchase their first home.

'The biggest issue of housing today'

The biggest issue of housing in the U.S. is the housing shortage, according to Orphe Divounguy, senior economist at Zillow.

The National Association of Realtors reports that as of mid-2023, there is a shortage of 4 million homes. Due to slow construction of new homes in recent years, the competition among buyers for available homes has increased, resulting in a rise in prices.

""Affordable housing is necessary, as stated by Jonathan Scott, co-host of the HGTV series "Property Brothers." He emphasized that if we don't act now, it will have a significant impact on everyone."

Scott predicted that a prolonged housing shortage could significantly impact first-time buyers in the long run, stating, "In 20 years, no young person will be able to afford to buy a home, full stop."

The construction of single-family homes in the U.S. increased by 2.7% in September, reaching a total of 1,027,000 new homes that began construction, according to U.S. Census data.

Due to the limited number of homes available, there is increased pressure on home prices, as stated by Selma Hepp, chief economist at CoreLogic.

According to Redfin, the cost of a typical starter home in August was $250,000, an increase of $10,000 from the previous year.

'The winners in today's housing market'

Repeat homebuyers and sellers, who have previously owned and sold homes, dominate the housing market. They can leverage their prior homeownership to access home equity, which can be used to purchase homes outright.

According to NAR, a record high of 26% of homebuyers paid cash for their homes, which is equivalent to about a quarter.

In Q2 2024, U.S. homeowners with mortgages had a net homeowner equity of over $17.6 trillion, up $1.3 trillion from the previous year, representing an 8.0% growth.

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According to Lautz, baby boomers and retirees are currently the most successful in the housing market. The typical repeat homebuyer is now 61 years old, and sellers are typically 63, as stated in the NAR report.

According to Hepp, older homebuyers typically have around $300,000 in home equity, while younger millennial buyers have less.

'We're seeing renters staying renters for longer'

Experts say that high rent costs and debt-to-income ratios make it difficult for potential homebuyers to save for a home.

During the pandemic, rent growth outpaced wage growth. In 2022, rent growth reached a high of 16% annually, while wage growth peaked at 9.3%, according to data from Indeed.

Renters typically spent around 31% of their income on housing, with half of renter households being "cost burdened" and spending more than 30% of their income on housing.

He stated that due to the high cost of living, renters are staying in their homes for longer periods.

High rent prices can hinder your ability to both save money for a home and pay off any outstanding debts, according to Lautz.

If a potential buyer has outstanding student loans, their monthly rent cost could make it harder for them to make larger payments towards their debt balance, she said.

Your debt-to-income ratio, which reflects how much money you pay monthly towards debt, impacts your ability to qualify for a mortgage. Lenders assess this factor to determine if a borrower can afford a mortgage payment in addition to their existing loan obligations.

In an inflationary environment, these things tend to accumulate rapidly, Lautz explained.