Gabby Forte has always wanted to own a house.
As a first-time U.S. homebuyer, she's part of a group that faces increasing challenges in shrinking affordability and inventory. Her odyssey to finding a home illustrates why the National Association of Realtors says the share of first-time buyers has now fallen to the lowest point since the trade group started collecting data in 1981.
After graduating from college and living with her parents for a year, she got her own apartment and spent a decade bouncing around rentals in Baltimore. She took another year scouring for something within her strict $220,000 budget, battling cash buyers able to offer more, before closing on her house in Hampden in July 2023 — only after the property’s initial buyer fell through.
“I’ve been saving for a really long time,” said Forte, now 35. “I just was like, so ready. I couldn’t live in my studio apartment anymore. I didn’t want to move and rent again. And I just was very mentally and emotionally ready to own my own home.”
First-time homebuyers are grappling with high home prices, stifled inventory and elevated mortgage rates. And for some of those prospective buyers, it’s enough to push them out of the market altogether.
Between July 2023 and June 2024, the share of homebuyers who were first-timers reached an all-time low of 24%, according to the new National Association of Realtors tracking of housing market sales and prices.
The smaller portion is a steep drop-off from recent years, too. Last year, the group made up 32% of all buyers, and before 2008, that figure usually hovered around 40%. It’s a shift that’s disrupting other parts of the housing market, changing the way buyers pay for their houses, how long they live in them and when they make their first purchase.
Older first-time buyers
As recently as the early 2020s, the median age for first-time homebuyers was hovering in the early 30s. But these days that age is 38, according to the NAR report. In other words, three years ago Forte would have been considered old for buying her first home at 34, but now, she's considered to be on the younger end of that spectrum.
That shift in age has also changed the types of first-time homebuyers. Now, there are more single women buying houses than in years past, the NAR report said, while at the same time the share of married couples who make up the first-time homebuyers is decreasing.
The biggest barrier for first-time homebuyers entering the market has been “the increased affordability and lack of affordable housing inventory,” according to Brandi Snowden, NAR’s director of member and consumer survey research.
“First-time homebuyers are saying that saving for a down payment is the most difficult step of the home-buying process,” she said in an interview. “They might have student loan debt to pay down, car loans, so they're also faced with a lot of other challenges just to try and get into homeownership.”
That’s not as much of an issue for repeat buyers, though. While 91% of first-time homebuyers financed their purchase, only 69% of repeat buyers took out a mortgage.
At the same time, repeat buyers who did finance their purchases were able to make a bigger down payment than first-time purchasers.
Increasing homeowner equity
The disparity is likely a result of increasing homeowner equity, the difference between a property's current value and its unpaid mortgage, that has grown as home prices have soared in recent years.
Higher equity has also given repeat buyers more opportunity to make their next home purchase in cash. According to the NAR, the share of buyers who paid in all cash is at an all-time high.
That shift has put pressure on first-time buyers such as Forte, incentivizing larger down payments and other concessions to give them an edge over cash buyers.
Beyond just saving for a down payment, though, first-time buyers also have to contend with volatile mortgage rates that have been elevated for much of the past year and a half.
For Forte, that made her home search even more complicated, both practically and emotionally.
Because some of her offers were rejected, Forte’s buying process was drawn out through the summer of 2023. At the same time, mortgage rates were rising.
Added borrowing costs
Though she ultimately ended up purchasing a cheaper house than those she initially “loved,” Forte said her monthly mortgage payments now are higher because of her loan’s nearly 6.5% interest.
“That was a really hard pill to swallow,” she said.
The increase in rates also changed the way Forte financed her house. She put down less than the standard 20% down payment, so she has mortgage insurance now. And she had to buy down her rate a bit, meaning she paid more upfront to receive a temporary lower rate.
Another challenge that cost Forte time was getting pre-approved for her financing. As a small business owner, it took more for Forte to prove that she had enough money to make a down payment and monthly mortgage payments, especially coming off the COVID-19 pandemic.
“For 2020, 2021, we had these years that were like, my income looked like basically nothing, because I collected unemployment,” she said. “So while I had plenty of money in the bank for, you know, a down payment, and I was back making plenty of money, and I could certainly afford it, it was hard to prove it.”
Now, after what she described as “the most stressful thing ever,” Forte said she’s looking forward to finding a way to refinance her home in the next two to three years, provided mortgage rates fall from their current averages. Until then, she said her payments are manageable, and her 925-square-foot sanctuary is the perfect place for her.