The Great Divide: Why First-Time Buyers Feel Shut Out of Today’s Housing Market

by Tristan Phillips

If you feel like everyone buying their first home these days is a little older than they used to be, you're absolutely right. The housing market has undergone significant changes, presenting unique challenges for first-time homebuyers in today's real estate landscape.

According to the 2025 Profile of Home Buyers and Sellers from the National Association of REALTORS® (NAR), the median age of first-time homebuyers hit 40 this year, the highest on record. This NAR report reveals a striking trend in the real estate market, highlighting the growing difficulties faced by those looking to enter homeownership.

That's up from 38 last year, and way up from the late 29 back in the 1980s. So what's behind this massive generational shift in homebuying patterns? Let's dig in.

It's Not Just You. Buying a Home Really Is Harder.

The same NAR report shows that first-time homebuyers now make up only 21% of all home purchases, the lowest share ever recorded (historically, it has been around 40%). This statistic underscores the housing affordability squeeze that many potential buyers are experiencing.

That means fewer people are managing to buy their first home, and those who do are often waiting longer, saving more, and carrying heavier financial baggage than buyers from previous generations. The path to homeownership has become increasingly challenging, with affordable housing becoming a pressing concern for many.

So what's causing the delay in homeownership for first-time buyers?

The Housing Market's Growing Divide

While the share of first-time homebuyers is getting smaller, repeat buyers (those selling one home to buy another) continue to dominate. They're older, have more housing equity, and often don't need financing at all. In fact:

The median age of repeat buyers is 62, an all-time high.
Nearly 30% of repeat buyers paid all cash, compared to just 8% of first-time homebuyers.
Repeat buyers made median down payments of 23%, while first-timers managed 10%, which is the highest since 1989.

That combination of cash and equity makes it tough for first-timers to compete, especially in markets where homes still sell close to the asking price (buyers in 2025 typically paid 99% of the list price). The prevalence of all-cash buyers further complicates the situation for those relying on financing.

Why It's So Hard to Break Into the Housing Market

One of the biggest culprits is affordability, with several trends working against new buyers:

Higher mortgage rates: The average during the study period was 6.69%, keeping monthly payments higher than pandemic years.
Limited inventory of affordable housing: Most new listings are at higher price points, putting starter homes and entry-level homes in short supply.
Student loan debt and rent: Among first-time homebuyers who succeeded, 59% used personal savings and 26% tapped financial assets like 401(k)s or stocks, showing just how hard it is to save cash while paying rent and managing student loan debt.

Put all of this together, and it makes sense why the typical first-time homebuyer in 2025 was 40 years old. It's taking longer than ever to reach that first closing table, with the housing affordability squeeze pushing many potential buyers to explore alternative homebuying strategies.

What's Driving the Advantage for Repeat Buyers

On the other side of the gap, repeat buyers have had a decade or more of home price appreciation to build housing equity. This equity serves as a powerful tool for wealth accumulation, giving repeat buyers a significant advantage in the market.

They've owned their homes for a record 11 years before selling, and many are now cashing out that equity to buy their next home outright or with a smaller mortgage.

Because they've already played the real estate game once, they're better positioned to navigate multiple-offer situations and can act faster, two key advantages in a tight market with limited inventory.

What You Can Do If You're a First-Time Homebuyer

If you're a first-time homebuyer feeling frustrated, don't give up. There are real ways to bridge the gap — especially at the local level. Here's where to start:

Explore down payment assistance programs. There are programs and forgivable loans that can help first-time homebuyers with upfront costs.
Ask your lender about creative financing. Some offer 2-1 buydowns or temporary rate reductions that can lower your initial payments. Don't forget to inquire about FHA loans and VA loans, which can offer more flexible terms for qualified buyers.
Take a look at new home construction. Many builders are offering rate buydowns or other incentives to help make monthly payments more affordable. New construction can also help address the limited inventory issue in many markets.
Consider multigenerational homes. Fourteen percent of homebuyers purchased a multi-gen home in 2025, often to save on costs or care for family members. This approach can make homeownership more attainable for first-generation homebuyers.
Work with experienced real estate professionals. Eighty-eight percent of homebuyers used a real estate agent in 2025, and most said the top reason was to find the right home and negotiate terms, which is especially important when every dollar counts.
Explore alternative homebuying strategies. Consider options like house hacking, where you rent out part of your property to offset mortgage costs. This can be an effective way to enter the market and build equity.

The Bottom Line

The path to homeownership might look different in 2025, but there's still plenty of opportunity. Yes, the average first-time homebuyer is older, but that also means more prepared, more stable, and more strategic.

If you're planning to buy in the next year or two, start the conversation early. As a real estate professional, I can walk you through local programs, creative financing options, and what it really takes to go from "someday" to "sold." Together, we can navigate the challenges of today's housing market and find a path to homeownership that works for you.

Sources: BAM, NAR