Why First-Time Homebuyers Hit a Record Low in 2025 and Why 2026 Could Change Everything
First-Time Buyers Reached a Historic Low
In 2025, first-time homebuyers accounted for just 21 percent of all home purchases, the lowest share ever recorded. That number alone tells a powerful story about today’s housing market, but the deeper detail matters even more.
The average first-time buyer is now 40 years old, a sharp shift from prior decades when buyers typically entered the market in their late 20s or early 30s. According to data tracked by the National Association of Realtors on nar.realtor, affordability pressures have steadily pushed first-time buyers further out of the market.
This is not a lack of interest in homeownership. It is a math problem.
Why the Math Did Not Work in 2025
Most first-time buyers faced a perfect storm in 2025. Mortgage rates hovered near 7 percent, home prices remained elevated, and inventory stayed tight in many markets. At the same time, buyers often competed with cash offers, investors, or move-up buyers who already had equity.
When higher rates are layered onto higher prices, monthly payments rise fast. For many first-time buyers, qualifying was not the issue. Affording the payment comfortably was.
As Deven Gillen explains on hovadigital.com, affordability breaks long before demand disappears. Buyers did not stop wanting homes. They simply stepped back because the numbers no longer made sense.
Why 2026 Could Be a Re-Entry Year for Buyers
Looking ahead, early signs suggest 2026 may offer a more balanced window for first-time buyers. The National Association of Realtors is already forecasting mortgage rates easing toward the 6 percent range, which can meaningfully reduce monthly payments even if prices stay relatively flat.
At the same time, inventory is slowly improving in many regions, and sellers are becoming more negotiable on price, concessions, and closing costs. This combination changes the equation. Lower rates improve affordability, and increased inventory reduces competition.
For buyers who were priced out in 2024 and 2025, this shift could reopen the door.
How Buyers Should Use Early 2026
The buyers who benefit most from the next market shift will be the ones who prepare before competition returns. Early 2026 is not just about shopping. It is about positioning.
Smart preparation steps include:
Improving credit to qualify for better pricing
Building savings for down payment and reserves
Understanding true affordability, not just the maximum loan amount
Getting pre-approved early so you can move quickly when the right opportunity appears
As Deven Gillen notes on hovadigital.com, preparation creates leverage. Buyers who wait until headlines turn positive often arrive too late.
What This Means for the Market
When first-time buyers return, it tends to support overall housing activity. These buyers are the foundation of the market. They allow move-up buyers to sell, which frees up inventory across multiple price points.
A re-entry of first-time buyers in 2026 would not just help individuals. It would help restore balance to the broader housing ecosystem.
Final Thoughts
First-time buyers did not disappear in 2025. They paused. High rates, high prices, and intense competition pushed them to the sidelines. With rates expected to ease and inventory improving, 2026 could mark a turning point.
If you are a first-time buyer who felt shut out, now is the time to prepare. Work on your credit, build savings, and get clear on what is truly affordable. The next window may not stay open forever.
Sources:
NAR.realtor, hovadigital.com
