First-Time Homebuyers Are Still Buying Homes — Here's What Today's Market Is Telling Us
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Research Team - 15 Jul, 2026
For years, rising mortgage rates and record-high home prices have led many people to believe first-time homebuyers have disappeared from the housing market. The reality is more encouraging.
Short answer: First-time buyers still account for 49% of all purchase loans — nearly one out of every two homebuyers. Their share has slipped from 56% in 2022, but demand for homeownership hasn’t gone away. Rising incomes, smaller down payment programs, and flexible buying strategies are helping first-time buyers stay in the market despite higher prices and mortgage rates.
First-Time Buyers Still Represent Nearly Half of Home Purchases
Recent mortgage lending data shows first-time homebuyers accounted for 49% of all purchase loans last year. That’s down from 56% in 2022, but it still means nearly one out of every two homebuyers is purchasing their first home.
First-time buyers haven’t disappeared — they’re simply navigating a more competitive and expensive market than buyers faced just a few years ago.
The American Dream Is Still Alive
Despite affordability concerns, Americans continue to value homeownership. A recent national survey found:
- 81% of U.S. adults still believe homeownership is part of the American Dream.
- Most prospective buyers still want to own a home — they’re simply waiting until the numbers make sense or adjusting their expectations.
Housing demand hasn’t vanished. For many households, it’s simply been delayed by higher monthly payments.
First-Time Buyers Are Earning More Than Ever
One of the biggest shifts in today’s market is income. Between 2022 and 2025, median income for first-time buyers rose from approximately $61,700 to more than $77,200 — roughly a 25% increase.
Higher incomes are helping many buyers qualify for today’s higher home prices and mortgage payments, though income growth hasn’t fully offset affordability challenges.
Home Prices Continue to Rise
The median purchase price for first-time buyers climbed to approximately $346,000 in 2025 — about 10% higher than three years earlier.
Higher prices combined with elevated mortgage rates mean many buyers are adjusting their approach:
- Purchasing smaller homes
- Buying farther from city centers
- Shopping longer before making an offer
- Looking for homes that need cosmetic updates
Down Payments Have Stayed Surprisingly Small
One statistic that surprises many people: first-time buyers aren’t putting 20% down. The median down payment was only 4.85% of the purchase price, with many buyers relying on:
- FHA loans
- Conventional low-down-payment programs
- VA loans (for eligible veterans)
- State and local first-time buyer assistance programs
- Down payment assistance grants
For many households, waiting years to save 20% simply isn’t realistic — and it isn’t necessary.
First-Time Buyers vs. Repeat Buyers: 2022 to 2025
| Metric | 2022 | 2025 |
|---|---|---|
| First-time buyer share of purchases | 56% | 49% |
| Median first-time buyer income | ~$61,700 | ~$77,200 |
| Median first-time buyer purchase price | ~$314,000 | ~$346,000 |
| Median first-time buyer down payment | Higher | 4.85% |
Repeat buyers continue to have an edge, generally carrying higher incomes, more home equity, larger purchasing power, and greater flexibility when making offers. Interestingly, repeat buyers also trimmed their average down payment slightly, suggesting even experienced buyers are choosing to preserve cash rather than make larger upfront payments.
Why Many First-Time Buyers Are Waiting
Today’s buyers face several obstacles:
Higher Mortgage Rates
Monthly payments remain significantly higher than during the ultra-low-rate environment of 2020 and 2021.
Limited Inventory
In many markets, buyers still have fewer homes to choose from than before the pandemic.
Affordability
Even with rising incomes, home prices have climbed faster than wages in many parts of the country.
These factors have slowed first-time buyer activity — but they haven’t eliminated demand.
Should You Wait to Buy?
Trying to perfectly time the housing market rarely works out. Instead, focus on:
- Building a strong credit profile
- Saving for a down payment
- Understanding your true monthly affordability
- Getting pre-approved before you start shopping
- Working with an experienced local real estate agent
If mortgage rates decline in the future, more buyers could re-enter the market at the same time — increasing competition for available homes.
Working With the Right Real Estate Agent Matters
Buying your first home can feel overwhelming, especially in a changing market. An experienced local agent can help you understand your neighborhood options, identify homes that fit your budget, negotiate effectively, avoid costly mistakes during inspections and contracts, and navigate financing and closing with confidence.
That’s the matching problem IDEAL AGENT solves. We connect buyers with top 1% local real estate agents, vetted for experience and results — so first-time buyers get expert guidance without guessing who to trust. And when it’s time to sell that first home down the road, IDEAL AGENT sellers get full-service representation at just a 2% listing commission, well below the traditional 2.5–3%.
The Bottom Line
First-time homebuyers remain a vital part of today’s housing market. While affordability challenges have reduced their share of overall purchases, nearly half of all buyers are still purchasing their very first home.
The buyers succeeding today aren’t waiting for the “perfect” market — they’re preparing financially, staying flexible, and working with knowledgeable real estate professionals who can help them make smart decisions.
Frequently Asked Questions
Why are fewer first-time homebuyers buying homes?
Higher mortgage rates, rising home prices, and affordability challenges have reduced the percentage of first-time buyers, although many continue purchasing homes.
How much do first-time homebuyers typically put down?
Recent lending data shows the median down payment for first-time buyers is about 4.85%, thanks to low-down-payment loan programs.
Is now a good time to buy your first home?
The best time depends on your financial readiness, local market conditions, and long-term goals rather than trying to predict future mortgage rates.
What programs help first-time homebuyers?
Many buyers qualify for FHA loans, VA loans, USDA loans, conventional low-down-payment mortgages, and state or local down payment assistance programs.
Should first-time buyers wait for lower mortgage rates?
Waiting may help if rates decline, but it could also mean facing more competition if additional buyers return to the market. Buyers should focus on affordability and personal readiness rather than timing the market perfectly.
Ready to find the right home with the right guidance? Get matched with a top 1% local real estate agent and buy your first home with confidence.