Median Age Of First-Time Homebuyers Hits Record High Of 38 – Here's A Lookback Onto Previous Years

The dream of homeownership is becoming increasingly distant for many young Americans.

The median age of first-time homebuyers has reached a record high of 38, a three-year jump from July 2023, according to the National Association of Realtors' (NAR) 2024 Profile of homebuyers and Sellers report.

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

"The first-time homebuyer who can enter into today's market is older, has a higher income [and] is wealthier," NAR Deputy Chief Economist Jessica Lautz told CNBC, adding that higher home prices require bigger down payments.

The share of first-time homebuyers has plummeted to a historic low of 24%, down from 32% last year. It's the lowest level since NAR initiated data collection in 1981.

Experts cite a combination of factors, including a nationwide housing shortage, competition from wealthier buyers and high rental prices, as the primary obstacles hindering younger adults from purchasing their first home.

According to NAR, the U.S. housing market is facing a severe shortage of four million homes. Zillow Senior Economist Orphe Divounguy deemed the shortage the "biggest issue in housing today." Sluggish new home construction and heightened competition among buyers have exacerbated the rise in home prices.

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At a recent CNBC Your Money event, "Property Brothers" co-host Jonathan Scott cautioned that a sustained housing shortage could drastically affect first-time homebuyers.

"Give it another 20 years and literally no young person will be able to afford to purchase a home, period," Scott said.

Building activity has shown some improvement, with U.S. single-family housing starts reaching 1,027,000 in September, a 2.7% increase from August, according to U.S. Census data.

But the housing market remains tight, putting pressure on home prices.

According to Redfin, the typical starter home cost $250,000 in August, up from $240,000 the previous year.

Repeat homebuyers, who have owned and sold homes multiple times, dominate the housing market. Their previous homeownership grants them access to home equity, which can be substantial and, in some cases, sufficient to buy homes without a mortgage.

The trend is evident in the rising number of cash buyers. In 2024, a record-high 26% of homebuyers paid cash for their purchases. According to CoreLogic, U.S. homeowners with mortgages also collectively held over $17.6 trillion in home equity during the second quarter – up $1.3 trillion from a year ago.

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Baby boomers and retirees are the primary beneficiaries of today's housing market. According to the NAR report, the typical repeat homebuyer is 61 and sellers are typically 63.

The demographic also has the advantage of substantial home equity. Older buyers have an average of $300,000 in home equity, significantly more than younger millennial buyers.

Experts say high rent costs and elevated debt-to-income ratios are making it difficult for prospective homebuyers to save for a down payment. 

During the COVID-19 pandemic, rent prices surged faster than tenants' wages. In 2022, rent growth peaked at 16% annually, while wage growth peaked at 9.3%.

In 2022, the typical renter spent about 31% of their income on rent and about half of all renter households were cost-burdened, meaning they spent more than 30% of their income on housing.

High rent costs significantly impact financial stability, affecting the ability to save for a home and pay down existing debt.

For instance, people with outstanding student loan debt may struggle to make substantial payments toward their loans because of high monthly rent costs. This can lead to a higher debt-to-income ratio, a key factor lenders consider for mortgage applicants.

"All of these things snowball, especially in an inflationary environment," NAR's Lautz said.

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