Despite Headwinds, First-Time Homebuyers Rose to 34%
Washington, DC, November 15, 2021-Despite the highest home prices ever, fierce competition, and a nationwide housing shortage, more first-time buyers become homeowners during the Covid-19 pandemic, reports the National Association of Realtors
The percentage of first-time buyers who successfully purchased properties rose to 34% of all buyers over the past year. That’s up from 31% last year, according to the National Association of Realtors 2021 Profile of Home Buyers and Sellers.
The report is based on an NAR survey of nearly 5,800 buyers who purchased homes between July 2020 and June 2021.
“We have seen more first-time buyers taking advantage of the ability to live at home with family members during the pandemic and move directly into homeownership,” says Jessica Lautz, NAR’s vice president of research.
“That’s given first-time homebuyers a leg up. They’ve been able to save for a down payment without paying rent and be able to pay down debt,” says Lautz.
The typical first-time buyer was 33 and had a median household income of $86,500 in 2020.
First-time buyers were helped by record-low mortgage interest rates, which dipped below 3% earlier this year. The lower rates helped to offset higher home prices.
Plus, there were simply more millennials who aged into typical homebuying years, which helped add to the share of first-time buyers in the market.
“The ability to work remotely or work half of the time in the office and half of the time at home allowed homebuyers some flexibility to look outside of expensive areas” as well, says Lautz. If buyers didn’t have to commute every day, many were willing to move farther outside of the bigger cities.
Certainly, first-time homebuying hasn’t been easy over the past year. Coming up with that down payment was the hardest part of the homebuying process for about 29% of first-time buyers. Most had to make sacrifices to afford their home, such as spending less on entertainment, luxury goods, and clothes.
“It’s especially difficult because they’re facing multiple bids from other buyers who may be able to put down all cash or a large down payment,” says Lautz.