- The average age of U.S. homebuyers is 36 and the share of first-time buyers dropped, new study said.
- Meanwhile, the age of the average US home seller was 60 years old, an increase of four years.
- About 12% of home buyers purchased a new house, while 88% of buyers purchased a previously-owned.
The average homebuyer in the United States is older, while the number of first-time homebuyers is experiencing a major decrease, according to a newly released survey.
Among the findings of the National Realtors Association’s 2022 Profile of Home Buyers and Sellers released Thursday in arguably the most perplexing housing market in recent memory, the typical first-time buyer was 36 years old, an age increase of three years from last year as the age of repeat homebuyers was 59, both all-time highs.
However, the share of first-time homebuyers fell to 26%, the lowest level since the association began collecting such data more than 40 years ago.
Jessica Lautz, the association’s vice president of demographics and behavioral insights said the figure is not surprising given the housing market’s current combination of historically low inventory, high home prices and escalating interest rates.
“Those who have housing equity hold the cards and they’ve fared very well in the current real estate market,” Lautz added. “First-time buyers are older as a result of saving for down payments for longer periods of time or relying on a generational transfer of wealth to propel them into homeownership.”
Meanwhile, the age of the average U.S. home seller was 60 years old, an increase of four years, the association’s survey of 129 questions said.
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Homebuyers ‘impacted’ by mortgage interest hikes
The report comes a day after the Federal Reserve made its widely expected fourth consecutive 0.75 percentage point interest rate increase to fight inflation. Fed Chair Jerome Powell said Wednesday that the housing industry is “significantly impacted” by hikes.
The current mortgage interest rate is more than 7%, according to Mortgage News Daily.
“The mortgage market has already priced in the latest Fed move. Still, mortgage rates are near 20-year highs, and that hurts homebuyers,” Lawrence Yun, the Realtors association chief economist said Wednesday. “Once inflation is contained, mortgage rates will start to drift lower. It may be another year or two before that happens.”
Inflation also a key role in the lack of homebuyers
The ability to afford a house is a continuous theme throughout the Realtors’ report, especially with the current inflation rate at 8.2%, according to the U.S. Bureau of Labor Statistics.
That coincides with the median sales home price of $384,000 in September, an 8.4% spike from the $355,100 price tag in September 2021, as prices climbed in all four U.S. regions, the association said.
Also, the buyers and sellers report said 88% of all homebuyers were White as Latino buyers comprised 8%, 3% were Black and 2% were Asian and Pacific Islander. While the share of White and Latino buyers grew, the report said the percentage of other racial and ethnic groups declined.
“Rising mortgage rates have increased the monthly mortgage payment by $1,000 (with a 10% down payment), and minority groups may be impacted more heavily,” said Nadia Evangelou, the association’s senior economist & director of forecasting.
“With 7% mortgage rates, only 15% of Black households can currently afford to buy the typical home compared to 30% of White households,” Evangelou added. “Thus, Black families may fall further behind in homeownership compared to their White counterparts.”
Homebuyers hail from all walks of life
The Realtors association report surveyed buyers and sellers from coast-to-coast from all socio-economic backgrounds. Around 97% of first-time buyers financed their home purchase, with an average down payment of 6%, unchanged from 2021, the report said.
Simultaneously, the share of repeat buyers who financed their homes dropped to 73% compared to 83% last year.
Also, the number of weeks buyers searched for a home rose to 10 weeks from 8 weeks in 2021. The report said that many buyers took advantage of new virtual tours and listings in their search process.
About 61% of recent buyers were married couples, 17% were single females, 9% were single males and 10% were unmarried couples. This is the highest share of unmarried couples recorded, the report said.
Among first-time buyers, 18% of buyers were unmarried couples, and 5% were other household compositions. Both statistics are the highest shares recorded, the report added.
About 22% surveyed said the primary reason for buying a home was a desire to own their own home, the report said. For first-time buyers, this number jumped to 62%.
Around 12% of homebuyers purchased a new house, while 88% of buyers purchased a previously owned home, the report said. Also, 41% of buyers who bought new homes were looking to avoid renovations and plumbing or electricity problems and 31% of buyers who bought a previously owned home were most often considering a better price, the report said.
About 79% of recent buyers preferred detached single-family homes, with 8% choosing mobile or manufactured houses.
The Realtors’ association report said 91% of recent buyers were at least somewhat satisfied with their home-buying process. The typical home bought is a 1,800-square-foot house with three bedrooms and two bathrooms and was built in 1986.
Buyers surveyed said they purchased their homes for 100% of the asking price with 28% saying they bought their homes for more than the asking price because of intense competition during the once-hot housing market.
And, the median distance between the home that buyers recently bought and the home they moved from was 50 miles as the once-scorching “Zoom town” housing market flourished. The Realtors association said this was “a significant increase” in moving distance as the median distance was about 15 miles between 2018 and 2021.
About 47% of recent homebuyers said looking online for houses for sale was the first step they took in their search process, while 18% of buyers contacted a real estate agent first. About 86% said they found their agent to be helpful during the process.
Buyers searched for about 10 weeks, slightly up from an average of eight weeks in 2021 and 2020, the study said. Buyers looked at an average of five homes and viewed four homes only online as 96% of them used online tools during their search.
Nearly 50% of buyers surveyed cited the quality of the neighborhood as their most important factor in determining where they wanted to live. Around 37% said convenience to friends and family and overall affordability of homes were also factors.
And, a majority of buyers surveyed said they expected to live in their homes for at least 15 years, as 28% said that “they were never moving,” the report said.
Home seller preferences
The report also said the COVID-19 pandemic may have also “spurred sellers to make a home trade.” Among the top reasons to sell their home was to be closer to family and friends and because their home was too small.
Also among sellers, the report said 41% bought a larger home and about 32% purchased a home that was about the same size as their previous one.
About 63% of sellers found their agent through a referral from a friend, neighbor, or relative or used an agent they previously worked with before to buy or sell a home. And, 80% of recent sellers contacted just one agent before finding the right agent they worked with to sell their home, the study said.
Nearly 40% of sellers used the same agent to purchase a home to sell their home. That figure rises to 85% for sellers who purchased a new home within 10 miles of their old one.
For recently sold homes, the final sales price was an average of 100% of the final listing price, the highest recorded since 2002, the Realtors’ study said. Those recently sold homes were on the market for an average of two weeks, the study said, an increase from one week in 2021.
Only 20% of sellers surveyed said they offered incentives to attract buyers, a slight decline from 26% of all sellers in 2021. And, 91% of sellers were at least “somewhat satisfied” with the selling process, the study said.