For the third straight year, the number of first-time homebuyers entering the market has declined, according to a report by the National Association of REALTORS® (NAR).
College debt, high down payments, and rising mortgage rates make it increasingly difficult for these buyers to find a home. According to the report, 40 percent of new homebuyers carry $30,000 in student loan debt, making it difficult to save money for a down payment. As a result, the average first-time homebuyer makes a down payment of just 7 percent while the industry average is 13 percent.
“With the lower end of the housing market—smaller, moderately-priced homes—seeing the worst of the inventory shortage, first-time homebuyers who want to enter the market are having difficulty finding a home they can afford,” says Lawrence Yun, chief economist at NAR. “Even with a thriving economy and an abundance of job opportunities in many markets, monthly student loan payments coupled with sky-high rents and rising home prices make it exceedingly difficult for potential buyers to put aside savings for a down payment.”