It's never been harder for entry-level buyers to get a house.
Purchasing a home has become even more difficult for entry-level buyers due to ongoing affordability and inventory issues, according to a new report released by the National Association of Realtors (NAR).
The share of first-time homebuyers fell to a fresh record low of 26%, compared to 34% a year ago and a peak of 50% in 2010.
"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, vice president of demographics and behavioral insights at NAR.
It typically took buyers 10 weeks to search for a home, up from eight weeks in 2020 and 2021. Additionally, homebuyers purchased their homes for 100% of the asking price, with 28% purchasing for more than the asking price.
The age demographics of first-time buyers have also changed significantly. The typical first-time buyer was 36 years old – up from 33 years last year – and the typical repeat buyer's age rose from 56 to 59 years, the highest since NAR started tracking the data in 1981.
Meanwhile, the median expected home tenure for first-time buyers expanded to 18 years, the highest ever recorded and up from 10 years in 2021.
"Those with housing equity hold the cards, and they've fared very well in the current real estate market," Lautz said. "First-time buyers are older as a result of saving for down payments for longer periods of time or relying on a generational transfer of wealth to propel them into homeownership."
Due to high prices in major cities, more entry-level buyers are searching for homes in small towns and rural areas. According to NAR, the median distance between the home that recent buyers purchased and the home from which they moved was 50 miles, the highest ever recorded. That's compared to the median 15-mile distance recorded in 2018 through 2021.
"Family support systems still prevailed as a motivating factor when moving and in neighborhood choice," Lautz explained. "For others, housing affordability was a driving factor to seek homes in areas farther away. For many, remote work decisions were formalized in the last year, providing clarity for employees to permanently move to more distant areas."