US first-time homeownership hits record low amid affordability challenges

The number of first time homeowners nationwide has reached an all-time low.

A recent report issued by the National Association of Realtors (NAR) shows that first-time buyers account for only one in five home purchases or 21%, the lowest figure NAR has reported since 1981.

The report also revealed home equity remains the dividing line between those attempting to become first-time homeowners.

“The housing market remains sharply divided between homeowners with equity and first-time buyers trying to break in, many of whom are younger millennials,” Jessica Lautz, deputy chief economist for NAR, said in the report.

“For many younger households, affordability challenges and limited inventory are still making homeownership difficult to achieve.”

According to the findings, the largest share of first-time buyers (60%) is made up of younger millennials, those born between 1990 and 1996. However, that figure is 11% lower than it was one year earlier.

Interestingly, their older counterparts (1982 to 1989), maintain the highest median income at roughly $133,000.

In the report, Lautz also recognized a “shift” into middle age for older millennials as a key factor in buying power for this group.

“This cohort is now the highest-earning generation of home buyers, buys the largest homes and is most likely to have children living with them,” she said. “Those traits were once more commonly associated with Gen X buyers, who are now increasingly looking toward empty-nesting and retirement.”

Other findings indicate baby boomers, born between 1946 and 1964, make up almost half (42%) of all buyers, a figure consistent with the previous year. Equity obtained through homes they’ve sold previously accounts for their ability to purchase property.

On the lower end of the scale, both the Silent Generation (born between 1925 and 1945) and Gen Z (1999 to 2011) account for only 4% of first-time buyers.