Buying a starter home has rarely looked tougher. New National Association of Realtors data show just 1.14 million Americans bought their first house in 2024, barely a third of the 3.2 million who did so two decades ago and roughly half the historical norm.
What Happened: Realtors say the slide highlights how high prices and borrowing costs have pushed Gen Z and millennial buyers to the sidelines, often back to parents' homes or into long-term rentals, according to a report by Fortune.
The median existing-home price now tops $422,000, according to NAR, meaning a typical buyer needs about $117,000 in annual income to meet payments, which is nearly double what is required to rent the average apartment. With 30-year mortgage rates hovering near 7%, the monthly tab on that median house approaches before taxes and insurance only keep climbing.
First-time buyers are facing a “real mismatch” between what they've saved and what homes cost, said Los Angeles broker Tami Pardee, noting that a West LA condo now runs $940,000 and would carry payments more than $2,200 higher than local median rent. In Brooklyn, agent Alexandra Gupta said most entry buyers are dual-income professionals in their 30s, yet the “affordability gap” is huge. Many still need family help for the down payment.
Why It Matters: NAR's latest profile shows first-timers accounted for just 24% of all purchases last year, far below the pre-2008 norm of 40%. Rising cash offers, namely 26% of all deals and limited starter-home inventory have intensified competition for buyers without deep equity.
Analysts say relief hinges on lower rates, faster wage growth and more construction of smaller houses, none of which appears imminent. “We're seeing a reshaping of the housing ladder," Gupta explains. “Some first-time buyers are turning to long-term renting or even co-living models because the idea of owning a home has become so out of reach," she added.
Until those fundamentals shift, the American dream of a first home may stay on hold for millions of young adults who now need six-figure paychecks just to get a foot in the door.
Photo Courtesy: fizkes on Shutterstock.com
Read Next:
