Concerns about affordability are keeping more and more potential starters out of the housing market.
A new report shows that first-time homebuyers will make up 24% of all buyers this year, the lowest share since 1981, according to data from the 2024 National Association of Realtors (NAR) Profile of Home Buyers and Sellers.
High house prices, high borrowing costs and low inventories have put pressure on affordability in the past year, causing many first-time buyers to have doubts about purchasing a home. In July, NAR surveyed more than 167,000 recent homebuyers, who said barriers to entry remained challenging.
“In the time frame examined, mortgage interest rates rose to almost 8% and housing affordability fell to a historic low. Homebuyers continued to struggle with housing inventory,” NAR’s deputy chief economist Jessica Lautz told Yahoo Finance.
“At the same time, rents rose and after a lull in student debt, borrowers had to resume payments, making it difficult to save for a down payment,” Lautz added.
Mortgage rates have risen to 6% to 7% this year – and now the average mortgage rate is rising after hitting a two-year low in September. Meanwhile, entry-level buyers can also bid against those making all-cash offers.
“If a buyer had a solid financial foundation to enter the purchase market and there were multiple offers, then there is a chance they could be faced with an all-cash offer,” Lautz said.
