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Housing

First-Time Home Buyers Disappear as Housing Market Turns Rentals Dominant

Strategic Insights

— 2 min read

The US housing market continues to stifle dreams of homeownership, pushing aspiring buyers into the rental sector. According to the National Association of Realtors (NAR), there were 1.1 million first-time buyers in 2024, a staggering 380,000 fewer than the previous year and almost half of the historical norm. This trend is set to worsen, with sales data through May suggesting that 2025 will see a decline in home sales to just 40.3 million, a decrease from last year's total sales. New home buyers, typically seeking starter homes priced under $500,000, are particularly affected, with NAR data showing a significant slowdown in sales within this price range. The construction sector is also feeling the pinch, with new home builds dropping by 6% in May compared to the same period in 2024.

Key Takeaways:

  • First-time home buyers in the US have decreased to 1.1 million in 2024, down from 1.5 million in 2023 and almost half of the historical norm.
  • Sales data through May suggest a decline in home sales to 40.3 million in 2025, a decrease from last year's total sales.
  • The number of new home sales has dropped by 6% in May compared to the same month in 2024.
  • New home buyers typically seek starter homes priced under $500,000, which are experiencing a significant slowdown in sales.
  • The number of renters in the US has reached a record high of 46 million, with only 6 million of these renters earning enough to afford the monthly mortgage repayments on a median-priced home.
  • Gen Z and Millennials have lower rates of homeownership than baby boomers did at the same stage of their lives.
  • The Joint Center for Housing Studies at Harvard reports that US renters would need to earn $127,000 to afford the monthly mortgage repayments on a median-priced home, up from $79,000 in 2021.
  • New buyers represent about 40% of new home sales each year, according to the National Association of Home Builders.

Statistics:

  • 40.3 million: Projected home sales in 2025, a decline from last year's total sales.
  • 1.1 million: First-time home buyers in 2024, a 380,000 decrease from 2023.
  • 46 million: Record-high number of renters in the US, with only 6 million earning enough to afford the monthly mortgage repayments on a median-priced home.
  • 127,000: Earnings required by a renter to afford the monthly mortgage repayments on a median-priced home, up from $79,000 in 2021.
  • 40%: Percentage of new home sales accounted for by new buyers each year, according to the National Association of Home Builders.

Sources:

  • National Association of Realtors (NAR)
  • The Wall Street Journal
  • Harvard's Joint Center for Housing Studies
  • National Association of Home Builders

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