A record number of Americans used an inheritance to finance a down payment on their first home in 2024, according to a new study from the National Association of Realtors, which found that Americans who bought a home for the first time between July 2023 and June 2024 were older and wealthier than in previous years. The report underscores the growing struggle many Americans face in buying a home as prices have soared to near-record highs and mortgage rates have remained stubbornly high.
The study found that first-time homebuyers had a median household income of $97,000, up from $95,900 last year, and the median age of first-time homebuyers rose to 38, a new record. A generation ago, the typical first-time homebuyer was in their late 20s, the report said.
“We’re seeing a divide in this real estate market, where those first-time homebuyers aren’t just the traditional first-time homebuyers, like schoolteachers or first responders, who are really getting into the market,” said Jessica Lautz, NAR’s deputy chief economist. “The people who are able to get into it are really a select few.”
So few, in fact, that for the first time in the past year, the number of first-time homebuyers has shrunk to just 24% of all homebuyers — the lowest percentage since NAR began collecting data in 1981.
According to the report, a quarter of first-time homebuyers used a gift or loan from a family member or friend to finance their home purchase. That’s up slightly from 2022 and 2023, but down from the pre-pandemic average of 31% between 1997 and 2019. A record-high 7% of first-time homebuyers used their inheritance to make a down payment.
Lautz estimated that the decline in first-time homebuyers using family help to buy a home may be due to the fact that typical first-time homebuyers are getting older and may have their own money to make the purchase.
“Everyone’s situation is different, but that’s one of the things that seems to be working together. That seems to be going down at the same time that the average age is creeping up,” she said.
The gulf between the haves and the have-nots
The NAR report also highlights the large gap between Americans who owned a home during the recent spike in home prices and those who are looking to buy one.
Like first-time buyers, the typical repeat buyer has gotten older, with the average age rising from 58 last year to 61. The average household income of repeat buyers has also increased from $111,700 to $114,300 in the past year, the NAR said.
First-time home buyers may have a hard time competing with repeat buyers, who may have sold an existing home to buy a new one. Repeat buyers were able to enter the housing market with much larger down payments (median 23%) than first-time home buyers (median 9%). Thirty-one percent of repeat buyers paid for their homes in cash.
“The report shows both the struggle in America to secure homes to buy, as well as people who are flipping homes with record levels of home equity,” Lautz said.
Increased competition in the housing market has meant that home sellers have more power to set their prices. Homes that were on the market for four weeks or less typically received 100 percent of the asking price, the report found. Twenty-three percent of buyers paid more than the asking price for their homes.
Housing affordability issues have prompted some Americans to try new living arrangements. Multigenerational living has become more popular, reaching a record high of 17 percent in the past year, the study found. Thirty-six percent of homebuyers who purchased a multigenerational home cited cost savings, while 21 percent said the purchase was made because children over the age of 18 were moving back home.