First-Time Homebuyers Drop to Lowest on Record

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An affordability squeeze has pushed first-time buyers to take up the smallest share of the market ever.

According to a National Association of Realtors (NAR) report out Wednesday, first-time homebuyers made up just 21% of the U.S. market in 2025.

"The housing market remains sharply divided between homeowners with equity and first-time buyers trying to break in—many of whom are younger millennials," NAR Deputy Chief Economist Jessica Lautz said in a release.

Mortgage rates aren't the problem. When NAR began tracking in 1981, mortgage rates hit a record 18.63%. First-timers still made up 44% of the market, more than double today's share, with 30-year rates at 6.38%.

The portion of buyers who are doing so for the first time is down from 32% just two years ago. Throughout the 1990s and up to the Great Recession, it was common for 40% or more of buyers to be first-timers, according to data from the NAR and the U.S. Department of Housing and Urban Development.

NAR points to a chain reaction: tight inventory has driven up prices, making saving for a down payment harder. The median price for an existing home reached $408,800 in March, the 33rd straight month of year-over-year price gains.

Inventory sits below the level experts say is needed to produce a balanced market between buyers and sellers. The NAR estimates the market needs an extra 300,000 to 500,000 homes for sale to return to more normal conditions.

If you're trying to buy your first home, you're up against a market where the typical competing offer comes from someone older, with more equity, and increasingly with no mortgage at all. That's the affordability problem that changes in mortgage rates won't fix.

Analysts hoped falling mortgage rates over the last couple of years would coax more listings to the market as buyers drove up demand. That didn't happen.

Down payments are a choke point. Thirty percent of younger millennials called it the hardest part of buying, almost three times the 11% rate among all buyers. Younger millennials who reported difficulty saving said student loans, high rent, car loans, and credit card debt were crowding out their budgets.

In a recent Northwestern Mutual survey, 54% of Gen Z and 47% of millennial non-homeowners said they don't expect homeownership to be affordable— now or ever.

First-time buyers scraping together a down payment are also bidding against buyers making all-cash offers. Wednesday's report shows 97% of younger millennial buyers needed financing. Meanwhile, 26% of all buyers paid cash—an all-time high and well above the sub-10% share that held earlier in the 2000s.

"We're seeing buyers with significant housing equity making larger down payments and all-cash offers," Lautz said in a release, "while first-time buyers continue to struggle to enter the market."

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