In 2022, the share of home purchases made by first-time buyers fell to its lowest point since the National Association of Realtors (NAR) began tracking the metric, according to a new report from the organization.
Per the NAR’s recently released 2022 Profile of Home Buyers and Sellers, 26% of all residential real estate purchases were made by first-timers. That’s down from 34% in 2021 and down from a peak of 50% in 2010, when the first-time homebuyer tax credit was introduced. Affordability challenges have hit first-timers hard of late, pushing many to the sidelines in favor of repeat buyers or investors armed with more liquid assets, equity or cash.
“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,” said Jessica Lautz, NAR’s 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.”
Notably, with home values remaining heightened over the past year, the age of a typical first-time buyer has grown to 36 years, an all-time high and up from 33 years in 2021. Lautz explained that “first-time buyers are older as a result of saving for downpayments for longer periods of time or relying on a generational transfer of wealth to propel them into homeownership.”
With mortgage rates high and prices escalated, first-time buyers are expecting to stay longer in their first homes. The median expected home tenure for first-time buyers was 18 years, the highest ever recorded and up from 10 years in 2021.
The NAR report also included several interesting takeaways regarding repeat buyers, as well as homebuyers in general. Like that of first-time buyers, the age of the typical repeat buyer also grew, rising from 56 years last year to 59 years in 2022. And as with first-time buyers, this age marks a new peak since NAR’s Profile of Home Buyers and Sellers began running annually in 1981.
Home seekers are looking farther afield than ever before, with the median distance between a buyer’s previous home and their new property growing to 50 miles. That’s another record high, and it far exceeds the median moving distance of 15 miles from 2018 through 2021.
Continuing a trend that began during the onset of the COVID-19 pandemic, the shares of homebuyers who snapped up homes in small towns and rural areas each reached new high points at 29% and 19%, respectively. Conversely, the shares of homes that were bought in suburban (39%) and urban (10%) areas each fell on a year-over-year basis.
“Family support systems still prevailed as a motivating factor when moving and in neighborhood choice,” Lautz said. “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.”