With home prices on the uptick and mortgage rates still lofty, the median household income for homebuyers has ballooned to a staggering new record high, according to the National Association of Realtors (NAR).
Per the group’s recently released 2023 Profile of Home Buyers and Sellers, households that purchased a home between July 2022 and June 2023 had a median income of $107,000, up from $88,000 in the same period one year prior. That’s the highest level of household income for buyers since the NAR began tracking the data in 1981.
“Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped by nearly $20,000 and topped six figures for only the second time in our records,” said Jessica Lautz, the NAR’s deputy chief economist and vice president of research. “In a still-competitive housing market, more well-off homebuyers were able to have their bids accepted by offering larger downpayments and even by paying cash.”
Downpayments swelled to recent highs during the study’s latest time frame, confirming Lautz’s observations. The typical downpayment for first-time buyers was 8% — the highest level since 1997, when it was 9%. Repeat homebuyers typically put down 19%, the highest amount since 2005, when it was 21%.
First-time buyers were able to gain market share despite the tough real estate environment, increasing from 26% all homebuyers the previous year (an all-time low) to 32% this year. This share still remains well below the historic mean. Since 1981, first-timers have accounted for 38% of all home purchases each year, on average.
“First-time buyers tiptoed back into the market this year with less competition and fewer multiple-offer scenarios,” Lautz said. “While the share of first-time buyers is still near historic lows, it is higher than last year. Notably, today’s first-time buyers had household incomes nearly $25,000 above last year and are more likely to use financial assets to enter the market.”
These assets included the sales of stocks or bonds (which 11% of first-time buyers used to secure their downpayments), pensions or 401(k)s (9%), IRAs (2%) and cryptocurrency sales (2%).
Eighty percent of all buyers financed their residential purchases, down from 87% two years ago but up from 78% last year.