Why has the pathway to buying a first home become so constrained at the very moment demand from younger households is structurally robust? Recent data indicate that the proportion of first-time buyers in the market has fallen to an unprecedented low, with the 2025 Profile of Home Buyers and Sellers reporting that first-time purchasers represented only 21% of all transactions from July 2024 to June 2025. This is a contraction of roughly 50% from pre–Great Recession levels in 2007. This downturn marks a sharp contrast with the broader upward trend in homeownership rates that has been in place since 2016. As repeat buyers now make up the remaining 79% of transactions, many with all-cash offers, competition has intensified for the limited inventory that might otherwise be accessible to first-time purchasers.
> The pathway to first-time homeownership has narrowed sharply, even as demand from younger households remains structurally strong.
This decline is especially stark when compared with the historic average first-time share of 38% since 1981, and with the 2010 peak of 50% recorded when the First-Time Homebuyer Credit Act expired. These figures underscore how policy and macroeconomic conditions jointly shape entry to homeownership.
At the same time, the median age of first-time homebuyers has climbed to 40 in 2025, up from 38 in 2024. This signals a postponement of ownership despite a robust underlying cohort size. Approximately 22 million adults are estimated to meet the profile of potential first-time buyers in 2026, defined as individuals in the labor force, currently renting, and earning between $50,000 and $150,000. Yet, only about 2 million of them are projected to transition into homeownership, with 1.4 to 1.6 million expected to finance via a mortgage.
This gap between potential and realized demand illustrates how affordability, credit conditions, and inventory constraints intersect to delay or prevent purchase decisions.
Down payment dynamics further highlight the financial intensity of entering the market. The median down payment for first-time buyers reached 10% in 2025, the highest level since 1989. This increase is primarily supported by personal savings, which account for 59% of down payment sources, while financial assets such as 401(k) plans, stocks, or cryptocurrency contribute 26%, and gifts or loans from family and friends represent 22%.
Although repeat buyers deploy higher average down payments at 23%, first-time participants face a steeper relative burden because they must assemble capital without embedded housing equity. This is often in a context of rising rents and volatile asset markets. Projected U.S. Federal Reserve rate cuts could improve mortgage affordability and help reinvigorate buyer participation in the coming quarters.
Affordability pressures are magnified by pricing. The national median home sales price surpassed $400,000, creating a significant threshold for initial entry. In many metropolitan areas, the share of income required for mortgage payments has escalated. Markets exhibit substantial dispersion, ranging from 12.6% of income allocated to mortgage payments in Granite City, Illinois, to 25.4% in St. Louis Park, Minnesota. This underscores the geographic variability of financial feasibility.
The persistent shortage of affordable inventory constrains first-time buyer participation directly. Surging home prices and elevated mortgage rates in recent years have induced many aspiring buyers to retreat from active search or delay purchase timelines.
Nevertheless, certain markets offer comparatively accessible conditions for first-time acquisition, illustrating that affordability is uneven rather than uniformly absent. Rochester, New York, with a median listing price of $139,900 and a 19.1% income-to-mortgage ratio, ranks as a leading environment for entry-level buyers.
Harrisburg, Pennsylvania, presents a median price of $151,999 and a 19.7% ratio. Granite City provides both a low median price of $119,000 and the most favorable 12.6% mortgage-to-income share.
Additional markets such as Birmingham, Alabama, with a $148,950 median price and an 18.9% homeownership share among 25- to 34-year-olds, and Pittsburgh, Pennsylvania, which also ranks among the top destinations for new buyers, demonstrate how localized price levels and income structures can partially offset national headwinds. These markets create selective opportunities within a broader environment of constrained first-time homeownership.
