It may be reductive, but life can sometimes be charted by a series of milestones. High-school diploma, college degree, first car, marriage, first kid, and so on.
Increasingly, there’s one significant milestone being largely cut out of the sequence: first-time home-buying.
According to new data released by the National Association of Realtors this week, the share of first-time buyers of existing homes has shrunk to its lowest level in the past two years. How low exactly? In August, home-buying newbies accounted for 29% of all existing home purchasers, a marked decline from the nearly 40% notched by the group in early 2020.
So what’s causing the dip in new buyers? The answer may be found in the most simple of microeconomics: supply is going down, and prices are going up:
- The median price of existing homes sold in August reached $356,700 — a nearly 15% increase year-over-year, though the rate of annual gains has slowed a touch, dipping from July’s 18% year-over-year increase.
- The share of previously owned homes sold fell 2% in August from July, though the number is bifurcated by price point: sales of homes priced below $250,000 are lower than a year ago, while homes priced above $1 million have seen sales spike 40%.
Buyer’s Or Seller’s Market? What’s bad for buyers must be good for sellers, right? Not exactly. The competitive market has cooled, with the number of offers for new homes dropping from July’s 4.5 average to just 3.8 in August. In another telltale sign of waning demand, the rate of waived inspections (a slick trick buyers pull to gain a competitive bidding edge) has fallen in August as well.
We’re Net Worthy: Even with new home purchases slipping, American households have seen a sizable leap in net worth, according to the Fed’s second-quarter report released Thursday. Total household net worth jumped to $141.7 trillion in 2021’s second quarter, a 4.3% increase from Q1. But consumer debt is up as well, totaling $17.3 trillion, a quarterly gain of nearly 8%.