Spring May Not Be Pretty for First-Time Buyers
February 22, 2018
A shortage of homes and surging prices are hitting first-time buyers particularly hard heading into the spring season. The share of first-time homeowners dropped to 29 percent of all existing-home sales in January, down from 33 percent a year ago, according to the latest housing report from the National Association of REALTORS®.
Read more: 2018 Home Sales Off to a Sluggish Start
“First-time buyers are typically people with a tighter budget,” says Joseph Kirchner, realtor.com®’s senior economist. “They’re looking for homes on the more affordable end of the market, but that is where the lack of homes is most severe. … There’s plenty of demand, but people just cannot find a home on the market that meets their needs and they can afford. It’s not a good start for the spring market. The shortage will continue.”
In January, there were 15.5 percent fewer existing homes selling for $250,000 or less compared to a year ago. On the other hand, the biggest gains in homes were from those selling for $500,000 or more, which saw a 25 percent uptick.
Existing-home prices were up in every major region of the U.S. The West had the most expensive homes at a median of $362,600 in January, an 8.8 percent increase from over a year ago. The Northeast’s median prices reached $269,100 in January, up 6.8 percent annually. The South’s median home price of $208,200 is up 4.3 percent from a year ago, while the Midwest’s $188,000 median price is up by 8.7 percent.
“It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth,” Lawrence Yun, NAR’s chief economist, said in a statement.
Source: “Lack of Homes on the Market Tames a Toll on First-Time Buyers,” realtor.com® (Feb. 21, 2018) and “Homeownership Is Increasingly for the Wealthy, According to the Latest Sales Data,” CNBC (Feb. 21, 2018)
Updated: May 29, 2020