The share of first-time home buyers has dropped to a record low, according to the National Association of Realtors’ 2022 Profile of Home Buyers and Sellers. Analyzing demographics, preferences, and experiences of buyers and sellers across the U.S., the report reveals that just 26% of buyers between July 2021 and June 2022 were first-time buyers, an all-time low from when NAR began tracking the data in 1981, and down from 34% last year.
Reaching an all-time high is the age of the first-time buyer at 36 years old, up from 33 one year ago. The typical repeat buyer’s age climbed as well from 56 years old in 2021 to 59 in 2022. Also recording an all-time high is the median expected home tenure for first-time buyers at 18 years, which is up from 10 years in 2021.
“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,” says Jessica Lautz, NAR vice president of demographics and behavioral insights.
“Those who have housing equity hold the cards, and they’ve fared very well in the current real estate market. 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.”
As for sellers, the median age was 60, up from 56 years old in 2021. Typically, sellers lived in their home for 10 years before selling. While an increase from eight years the previous year, it’s the same tenure reported in 2019 and 2020.
Moving Farther
The report also found that the median distance between the home that recent buyers purchased and the home from which they moved was 50 miles, the highest distance ever recorded and more than a threefold jump from the median of 15 miles from 2018 to 2021.
Buyers also chose the quiet of small towns at 29% and rural areas at 19%, both at record highs, while the shares of homes purchased in suburban (39%) and urban (10%) locations declined from one year ago.
“Family support systems still prevailed as a motivating factor when moving and in neighborhood choice,” Lautz says. “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.”
Affordability and Race
White Americans accounted for 88% of all buyers, while Hispanic Americans made up 8%, Blacks Americans at 3%, and Asian Americans at 2%. The shares of Black and Asian buyers declined, both down from 6%, while white and Hispanic buyers increased from 82% and 7%, respectively. “Housing affordability and limited inventory impacted the buying power of all buyers; however, the greatest impact was felt by Black and Asian Americans, as both groups saw a shrinking share of home buyers,” Lautz says.
“Conversely, white and Hispanic Americans experienced gains in buyer shares. Population growth among Hispanic Americans likely drove the increase, while many white Americans are repeat buyers with housing equity that allows them to make easier trades in today’s market.”
The House Hunt
Buyers searched for a home for a median number of 10 weeks this year and typically purchased their home for 100% of the asking price. The time it took to find a home increased from eight weeks in 2020 and 2021.
Down from 87% last year and driven by the increased share of repeat buyers who paid all cash, 78% of recent buyers financed their home. For first-time buyers, the typical down payment was 6%; for repeat buyers, it was 17%. The majority of buyers (86%) and sellers (87%) hired a real estate agent or broker for their transaction.
