Young people find it 'wildly unaffordable' to buy homes in the U.S., as the average age of homebuyers rises to 56, according to a real estate expert.

Since July 2023, the average age of homebuyers in the U.S. has increased by six years, indicating that younger Americans are being excluded from the market due to rising ownership costs.

The National Association of Realtors' annual report shows that the average age of homebuyers has increased to 56 from 49 in 2023, reaching a historic high. This is a significant increase from the average age in the early 2010s, which was in the low-to-mid 40s.

In 2024, the median age of first-time buyers increased from 35 to 38 years old, while the percentage of first-time buyers decreased from 32% to 24%. This is the lowest percentage of first-time buyers since NAR began tracking the metric in 1981.

According to Bob Driscoll, senior vice president and director of residential lending at Massachusetts-based bank Rockland Trust, the past two decades in the mortgage business have been the most challenging for millennials to purchase a home.

The increase in homeownership costs is largely due to the rise in median U.S. home prices and the increase in average 30-year fixed mortgage rates.

Younger homebuyers struggle to afford a down payment and compete on bids

Younger buyers face significant challenges in achieving homeownership due to high costs, including saving for a down payment, managing student loan debt, dealing with high rent prices, and low wages early in their careers, according to Driscoll.

The median percentage buyers put down on a $435,000 home is 18%, which amounts to $78,300. This is a substantial expense, almost equal to the annual U.S. median household income of $80,610, according to U.S. Census Bureau data.

Younger buyers who can afford down payments are still often outbid by older, wealthier buyers using equity from homes they already own. As a result, younger buyers must absorb the additional cost out of pocket, according to Driscoll.

In the past year, the share of all-cash buyers, who are wealthier and younger, has increased from 20% to 26% in home purchases, according to a study.

A quarter of first-time homebuyers have relied on a gift or loan from a relative or friend to cover the down payment, according to the data.

According to Noah Damsky, a chartered financial analyst and principal at Marina Wealth Advisors, homebuying for the younger generation is unaffordable.

"Becoming a homeowner can be difficult without a substantial income, as data shows. While a median income covers basic needs, it's not enough to save for a down payment. Therefore, having a higher income or existing wealth is crucial to achieving this goal."

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