Forget the outdated image of who's buying their first house, because today’s first-time buyers are defying expectations with younger faces, creative financing, and a resilient drive to own their piece of the dream despite a challenging market.
Key Takeaways
- In 2023, 32% of first-time home buyers were aged 23-32 years old, marking the youngest average age group for FTHB since 2011
- First-time home buyers accounted for 26% of all home purchases in 2023, down from 34% pre-pandemic levels
- Among first-time buyers in 2023, 59% were married couples, while 18% were single females and 11% single males
- The median down payment for first-time home buyers in 2023 was 8% of the purchase price, down from 10% in 2022 due to lower rates
- 87% of first-time buyers financed their purchase with a mortgage in 2023, with FHA loans at 22%
- Average credit score for first-time home buyers was 730 in Q4 2023, per FICO data
- In 2023, first-time buyers purchased homes a median 10 miles from their workplace
- 54% of first-time buyers looked at 10 or fewer homes before purchasing in 2023
- Median time on market for FTHB homes was 22 days in 2023, faster than repeat at 25 days
- Home affordability index for first-time buyers fell to 92.3 in 2023, lowest since 2008
- 67% of first-time buyers cited high home prices as biggest barrier in 2023
- Mortgage rates at 7.8% in Oct 2023 priced out 1.5M potential first-time buyers
- First-time home buyer share in FHA loans was 82% in FY2023
- FHFA's Home Possible program aided 150,000 low-income first-time buyers in 2023
- FHA 203(b) loans originated $200B for first-time buyers in 2023, 3.5% down
First-time home buyers in 2023 were younger but faced serious affordability challenges.
Affordability and Challenges
- Home affordability index for first-time buyers fell to 92.3 in 2023, lowest since 2008
- 67% of first-time buyers cited high home prices as biggest barrier in 2023
- Mortgage rates at 7.8% in Oct 2023 priced out 1.5M potential first-time buyers
- Renters eligible for homeownership dropped to 24% in 2023 from 32% in 2021
- First-time buyer affordability ratio hit 5.5x income in 2023, up from 4.2x in 2020
- 45% of young adults aged 25-34 delayed buying due to insufficient savings in 2023
- Inventory shortage left only 3.5 months supply for entry-level homes in 2023
- 58% of first-time buyers felt priced out of desirable neighborhoods in 2023
- Down payment requirements averaged 11% for conventional FTHB loans in 2023
- Home price growth outpaced wages by 47% for first-time buyers since 2020
- 39% of millennials postponed homeownership citing student debt in 2023
- Credit denial rates for first-time applicants rose to 18% in 2023
- Entry-level home prices surged 40% from 2020-2023, median $320,000
- 52% of first-time buyers needed dual incomes to qualify in 2023
- Rental costs consumed 35% of income for potential FTHB, hindering savings
- 61% cited high interest rates as purchase deterrent in 2023 FTHB survey
- Institutional investors bought 15% of starter homes, reducing FTHB access in 2023
- Affordability gap widened: FTHB share fell to 26% from 32% average
- 44% of renters under 40 cited job instability as barrier to buying in 2023
- Property insurance premiums rose 20% for FTHB in high-risk areas 2023
- 37% of first-time buyers compromised on home size due to costs in 2023
- HOA fees averaged $300/month, deterring 22% of FTHB in condos 2023
- Wage growth lagged home price inflation by 5.5% annually for FTHB 2023
- 49% of potential first-time buyers remained renters due to low inventory 2023
- PMI costs added $100/month for 20% downpayment-avoiding FTHB in 2023
- Geographic affordability: only 12 MSAs viable for median FTHB income 2023
- 55% of Gen Z renters deemed homeownership unattainable in 2023 polls
- Maintenance costs estimated at 1-2% home value deterred 26% FTHB 2023
Affordability and Challenges Interpretation
In 2023, the American dream of homeownership became a financial obstacle course so steep that nearly everyone needed a partner, a prayer, and a time machine to afford a starter home.
Demographics
- In 2023, 32% of first-time home buyers were aged 23-32 years old, marking the youngest average age group for FTHB since 2011
- First-time home buyers accounted for 26% of all home purchases in 2023, down from 34% pre-pandemic levels
- Among first-time buyers in 2023, 59% were married couples, while 18% were single females and 11% single males
- Racial breakdown shows 72% White, 8% Hispanic/Latino, 6% Black/African American, and 5% Asian first-time buyers in 2022
- The median age of first-time home buyers in 2023 was 35 years, up from 31 in 2020 due to delayed purchases
- 24% of first-time buyers in 2023 had household incomes between $50,000-$74,999, the most common bracket
- First-time buyers with children under 18 made up 37% of FTHB in 2023, higher than repeat buyers at 29%
- In urban areas, 28% of first-time buyers resided in 2023, compared to 42% in suburbs
- 15% of first-time home buyers in 2023 were veterans or active military, utilizing VA loans predominantly
- Gen Z first-time buyers (born 1997+) rose to 9% in 2023 from 4% in 2021
- Single women comprised 19% of first-time buyers in 2023, owning homes at rates higher than single men at 10%
- Hispanic first-time buyers increased to 12% of total FTHB in 2023, up 3% from 2020
- 22% of first-time buyers in 2023 held college degrees, compared to 45% of repeat buyers
- First-time buyers in the Midwest represented 24% of regional FTHB in 2023, highest share
- Baby Boomer first-time buyers were only 2% in 2023, mostly downsizing or late entrants
- 17% of first-time buyers in 2023 were self-employed, facing higher underwriting scrutiny
- Asian first-time buyers averaged household income of $120,000 in 2022, highest among groups
- First-time buyers aged 33-42 made up 28% in 2023, the second largest age cohort
- 31% of first-time buyers lived with parents prior to purchase in 2023, aiding savings
- Black first-time homeownership rate stood at 44% in 2022, lagging overall 66%
- 14% of first-time buyers in 2023 were LGBTQ+ identified, per specialized surveys
- First-time buyers in the South comprised 38% of 2023 purchases, driven by migration
- Millennial first-time buyers (age 27-42) were 66% of FTHB in 2023
- 9% of first-time buyers had household incomes under $50,000 in 2023
- Female-headed households among FTHB rose to 21% in 2023 from 16% in 2019
- First-time buyers with disabilities represented 7% in 2022 HUD data
- 25% of first-time buyers in 2023 were from immigrant backgrounds
- Rural first-time buyers were 12% of total FTHB in 2023
- First-time buyers aged 43+ were 14% in 2023, often delayed by finances
- Household size for first-time buyers averaged 2.6 persons in 2023
Demographics Interpretation
The kids are alright, but they're older, still probably living at mom's house, overwhelmingly married, suburban, and now facing the sobering math of a market where first-time buyers are becoming a rarer, more financially squeezed demographic club.
Financial Profiles
- The median down payment for first-time home buyers in 2023 was 8% of the purchase price, down from 10% in 2022 due to lower rates
- 87% of first-time buyers financed their purchase with a mortgage in 2023, with FHA loans at 22%
- Average credit score for first-time home buyers was 730 in Q4 2023, per FICO data
- First-time buyers' median household income reached $107,000 in 2023, up 10% YoY
- 38% of first-time buyers used gift funds for down payments in 2023, averaging $20,000
- Student debt averaged $30,000 among first-time buyers in 2023, delaying purchases by 7 years
- 51% of first-time buyers saved for down payment over 2 years in 2023
- Closing costs averaged 2-5% of loan amount for FTHB in 2023, totaling $6,905 median
- First-time buyers' debt-to-income ratio averaged 36% in 2023 mortgage approvals
- 29% of first-time buyers tapped retirement savings for down payments in 2023, risking penalties
- Median monthly mortgage payment for FTHB was $1,935 in 2023, up 16% from 2022
- 62% of first-time buyers chose 30-year fixed mortgages in 2023, average rate 6.8%
- Home equity from prior rentals was used by 12% of FTHB for down payments in 2023
- First-time buyers' liquid savings averaged $45,000 post-purchase in 2023
- 19% of first-time buyers co-signed with family for better terms in 2023
- Property taxes averaged 1.1% of home value for FTHB purchases in 2023
- 44% of first-time buyers had auto loans averaging $22,000 at purchase in 2023
- FHA loan usage by first-time buyers hit 24% in 2023, with median loan $281,000
- First-time buyers' median FICO score dipped to 725 in late 2023 amid economic pressures
- 27% of FTHB used personal savings solely for down payment, averaging 9% equity
- Average homeowner's insurance for FTHB homes was $1,700 annually in 2023
- First-time buyers with gig economy income faced 15% higher denial rates in 2023
- Median purchase price for first-time buyer homes was $300,000 in 2023
- 33% of first-time buyers negotiated seller concessions averaging $10,000 in 2023
- Credit card debt averaged $7,200 for FTHB applicants in 2023
- VA loans comprised 13% of first-time buyer mortgages in 2023, zero down payment option key
- First-time home buyers' median net worth was $85,000 in 2022 SCF data
- 21% of FTHB used seller-paid closing costs up to 3% in 2023 deals
Financial Profiles Interpretation
The modern American dream now requires a family-funded down payment, a top-tier credit score to borrow nearly everything at higher rates, and a hopeful belief that a 7-year delay is merely a strategic pause.
Government Programs and Incentives
- First-time home buyer share in FHA loans was 82% in FY2023
- FHFA's Home Possible program aided 150,000 low-income first-time buyers in 2023
- FHA 203(b) loans originated $200B for first-time buyers in 2023, 3.5% down
- VA Interest Rate Reduction Refinance Loan saved 50,000 FTHB $1,200/year avg 2023
- USDA Rural Development loans funded 40,000 first-time rural buyers zero-down 2023
- Fannie Mae's HomeReady allowed 3% down for 97% LTV FTHB, 120,000 uses 2023
- Good Neighbor Next Door program sold 200 HUD homes at 50% off to FTHB 2023
- Energy Efficient Mortgage (EEM) added $8,000 financing for green upgrades FTHB 2023
- Freddie Mac's Home Possible used by 80,000 FTHB with 3% down in 2023
- CHFA grants provided $15M down payment assistance to 5,000 FTHB in Colorado 2023
- NJ HMFA First-Time Homebuyer Program issued 2,500 grants averaging $10,000 2023
- CalHFA MyHome Assistance up to 3.5% purchase price for 4,000 FTHB 2023
- Minnesota Housing Start Up offered 45,000 forgivable loans to FTHB 2023
- $25,000 FHA Down Payment Assistance via state HFAs reached 10,000 buyers 2023
- HOME Investment Partnerships Program allocated $1B for FTHB affordable units 2023
- Teacher Next Door grants averaged $8,000 for 3,500 educator FTHB 2023
- $10,000 Neighborhood Heroes Program for 1st responders FTHB in TX 2023
- Operation Homefront aided 500 military FTHB families with $5,000 grants 2023
- HFA Advantage loans with 3.5% DPA helped 15,000 FTHB nationwide 2023
- Community Seconds programs provided second liens up to 20% for FTHB 2023
- Green and Resilient Retrofit Program funded 2,000 FTHB energy upgrades $50K max 2023
- SONYMA Low Interest Loans for 6,000 NY FTHB with incomes <80% AMI 2023
- MassHousing ACHIEVE down payment aid up to $30,000 for 1,200 FTHB 2023
- DC DHCD Home Purchase Assistance up to $35,000 silent 2nd for 800 FTHB 2023
- Illinois IHDA 3% DPA grants for 3,500 FTHB under $170K income 2023
- Oregon Bond Residential Loan with MCC tax credit for 2,200 FTHB 2023
- $7,500 federal tax credit proposed for FTHB revived in 2023 discussions
Government Programs and Incentives Interpretation
These statistics reveal a surprisingly robust and intricate safety net of government programs, grants, and creative financing that is almost single-handedly propping up the first-time home buyer market, like a frantic stage crew holding up a wobbly set so the actors can finally afford to walk on stage.
Purchasing Trends
- In 2023, first-time buyers purchased homes a median 10 miles from their workplace
- 54% of first-time buyers looked at 10 or fewer homes before purchasing in 2023
- Median time on market for FTHB homes was 22 days in 2023, faster than repeat at 25 days
- 88% of first-time buyers used a real estate agent in 2023, with 65% seller's agent dual role
- Single-family homes were chosen by 89% of first-time buyers in 2023
- 43% of first-time buyers made offers within 4 weeks of starting search in 2023
- Townhomes appealed to 7% of first-time buyers in 2023, up from 5% in 2020
- 56% of first-time buyers prioritized price over location in 2023 surveys
- Median square footage of FTHB homes was 1,700 sq ft in 2023
- 23% of first-time buyers bought in planned communities in 2023
- First-time buyers waived appraisals in 18% of purchases in 2023
- 61% of first-time buyers wanted homes with home offices post-pandemic in 2023
- Condos were selected by 6% of first-time buyers in 2023, mostly urban
- 72% of first-time buyers inspected homes before closing in 2023, average cost $450
- First-time buyers' median home size increased to 1,800 sq ft in suburbs 2023
- 34% of first-time buyers competed with 2+ offers on their winning bid in 2023
- Outdoor space was a must-have for 80% of first-time buyers in 2023
- 47% of first-time buyers purchased fixer-uppers at 5% discount in 2023
- Energy-efficient features influenced 55% of first-time buyer decisions in 2023
- First-time buyers in 2023 bought homes with median 3 bedrooms
- 19% of first-time buyers used iBuyers or cash offers in 2023
- Proximity to family swayed 28% of first-time buyers' location choice in 2023
- 65% of first-time buyers sought garages/parking in 2023 purchases
- New construction homes were bought by 12% of first-time buyers in 2023
- Smart home tech featured in 40% of first-time buyer homes in 2023
- 51% of first-time buyers prioritized school districts in 2023
- Bidding wars affected 29% of first-time buyers, paying 2% over list in 2023
- 76% of first-time buyers wanted updated kitchens in 2023
- Historic homes appealed to 8% of first-time buyers in 2023
- First-time buyers' homes had median 2.5 baths in 2023 purchases
Purchasing Trends Interpretation
The 2023 first-time buyer sprinted a mere ten miles to a 1,700-square-foot suburban finish line, often skipping inspections but demanding an office and an updated kitchen, all while outrunning repeat buyers in a frenzied market where price trumped location and three-bedroom sanctuaries were won by swift, agent-guided bids on single-family fixer-uppers.
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