Real Estate

How High Home Prices Are Reshaping the U.S. Housing Market: First-Time Buyers Face Steep Challenges

First-time homebuyers fell to a record low, while repeat buyers leveraged equity, reshaping the market.

byAndres Castro

November 7, 2025, 10:24 AM

Happy young couple sitting on the floor using a laptop, surrounded by moving boxes.

A happy couple sits among moving boxes, using a laptop to plan their renovation or shopping. By MDL.

Executive Summary

The share of first-time homebuyers has fallen to a record-low 21%, with their median age climbing to an all-time high of 40 years, largely due to high rent and student loan debt.

Repeat buyers are effectively leveraging existing housing equity, making a median down payment of 23% and with 30% paying cash, creating a stark contrast with struggling first-time buyers.

Overall buyer demographics are shifting, with fewer buyers with children and older repeat buyers, leading to significant long-term financial consequences for delayed homeownership and individual wealth building.

The Trajectory So Far

The current housing market is experiencing a severe affordability crunch, making it increasingly difficult for first-time homebuyers to save for down payments due to high rent and student loan debt, pushing their median age to a record 40. This contrasts sharply with repeat buyers who are leveraging accumulated housing equity to make competitive offers, creating a significant disparity that reshapes homeownership demographics and delays wealth building for younger generations.

Assessing Risk and Value

The deepening divide in the housing market, characterized by a shrinking pool of first-time buyers and robust demand from equity-rich repeat buyers, suggests a bifurcated investment landscape. Investors may find sustained value in properties appealing to older, wealthier demographics, particularly in resale single-family homes in suburban and small-town markets, while facing increased risk or slower appreciation in entry-level segments. This demographic shift also signals potential long-term implications for mortgage market stability and broader wealth creation trends.

Expert Predictions and Forecasts

First-time homebuyers face significant hurdles due to affordability challenges, leading to a record-low share of transactions (21%) and an all-time high median age of 40, which is projected to result in less housing wealth and fewer lifetime moves.

Repeat buyers are effectively navigating the market by leveraging existing housing equity, making a median down payment of 23% and often paying cash, creating a “tale of two cities” where they thrive while first-timers struggle.

The housing market’s persistent affordability crunch has significantly reshaped the demographic landscape of homebuyers, according to the National Association of Realtors’ (NAR) 2025 Profile of Home Buyers and Sellers. The report, covering transactions between July 2024 and June 2025, reveals a record-low share of first-time homebuyers, accounting for just 21% of transactions, while the median age for this group climbed to an all-time high of 40 years.

First-Time Buyer Hurdles

The contraction in first-time buyers is stark, having fallen by 50% since 2007, prior to the Great Recession. Jessica Lautz, NAR deputy chief economist and vice president of research, highlighted the severe implications, noting that “Today’s first-time buyers are building less housing wealth and will likely have fewer moves over a lifetime as a result.” High rent and student loan debt are cited as primary barriers preventing aspiring homeowners from accumulating down payment savings.

Successful first-time buyers are increasingly relying on personal savings (59%) or financial assets (26%) for their down payments. This marks a shift from previous years where gifts or loans from friends and relatives were more common. The median down payment for first-time buyers reached 10% in the past year, matching the highest level recorded by the NAR since 1989.

Repeat Buyers Leverage Equity

In contrast, repeat buyers are navigating the market more effectively, leveraging existing housing equity to make competitive offers. The NAR reports that repeat buyers made a median down payment of 23%, with 30% paying cash for their home purchase without financing. This disparity creates what Lautz describes as “a tale of two cities” in the housing market, where equity-rich buyers thrive while first-timers struggle.

Repeat buyers are also aging, with a median age of 62, the highest ever recorded by the NAR. Their primary considerations for a new home have shifted, with neighborhood quality and convenience to friends and family now ranking above proximity to work.

Evolving Buyer Demographics

Overall, married couples constitute the largest segment of buyers at 61%, followed by single women at 21% and single men at 9%. Among first-time buyers, single women represent 25% and single men 10%. The share of buyers with children under 18 has fallen to an all-time low of 24%, attributed by the NAR to reduced birth rates, an increase in older repeat buyers, and childcare expenses hindering younger buyers’ ability to save for a down payment.

Shannon McGahn, NAR executive vice president and chief advocacy officer, emphasized the long-term financial consequences of delayed homeownership. She noted that delaying ownership from age 30 to 40 could mean losing approximately $150,000 in equity on a typical starter home, impacting wealth building.

Income, Home Type, and Location Trends

The median household income for all homebuyers in 2024 rose to $109,000, with first-time buyers reporting a median household income of $94,400. Approximately 29% of buyers had household incomes below $74,999. In terms of property type, 12% of buyers purchased new homes in 2024, primarily to avoid renovations or issues with plumbing and electricity, while 88% opted for resale homes.

Detached single-family homes remained the most popular choice at 76%, followed by townhomes or row houses at 7%. The average home purchased in 2024 was 1,900 square feet, featuring three bedrooms and two bathrooms. Buyers are also moving shorter distances, with the median distance between old and new homes being 20 miles, down from 50 miles in 2022. Suburbs and subdivisions attracted 44% of buyers, while 24% chose small towns.

Key Takeaways

The latest NAR report underscores a widening gap in the housing market, where affordability challenges are pushing first-time buyers to older ages and lower participation rates, while repeat buyers benefit from accumulated equity. This trend has significant implications for individual wealth creation and the overall demographic makeup of homeownership in the United States.