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Monday, November 4, 2024

First-Time Buyers at 24%, Age Hits Record High

 A record high 26% of buyers paid cash for their home and 17% purchased a multigenerational home, according to NAR’s new 2024 buyers and sellers profile.

WASHINGTON — The first-time homebuyer market share decreased to a historic low of 24% (down from 32% last year), while home buyers’ ages hit all-time highs of 56 years overall (49 last year), 38 years for first-time buyers (35 last year) and 61 years for repeat buyers (58 last year), according to the National Association of Realtors®' 2024 Profile of Home Buyers and Sellers.

This annual survey of recent home buyers and sellers – this year tracking transactions between July 2023 and June 2024 – has been NAR's flagship report since it first published in 1981, providing industry professionals insight into detailed homebuying and selling behavior.

“The U.S. housing market is split into two groups: first-time buyers struggling to enter the market and current homeowners buying with cash,” said Jessica Lautz, NAR deputy chief economist and vice president of research. “First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers. Meanwhile, current homeowners can more easily make housing trades using built-up housing equity for cash purchases or large down payments on dream homes.”

The typical home buyer’s median household income for 2023 rose to $108,800 from $107,000 in 2022. First-time buyers had a median household income of $97,000, up from $95,900 the prior year and an increase of $26,000 in the last two years. Repeat buyers had a median household income of $114,300, up from $111,700 the previous year.

The share of married couples increased to 62% of all buyers, with single female buyers seeing a slight rise to 20%. Conversely, the share of single males decreased to 8% and unmarried couples dropped to 6%. In addition, the share of single female first-time buyers jumped by 5%.

Eighty-three percent of recent home buyers identified their ethnicity as White or Caucasian. Seven percent of recent buyers identified as Black/African American, 6% identified as Hispanic/Latino, 4% identified as Asian/Pacific Islander and 3% as some other ethnicity.

Seventy-three percent of recent home buyers did not have a child under the age of 18 in their home – the highest share recorded.

Seventeen percent of home buyers purchased a multigenerational home, the highest share in the data series. The top reasons cited were cost savings (36%), to take care of aging parents (25%), children over the age of 18 moving back home (21%), and children over the age of 18 who never left home (20%).

“As home buyers encounter an unaffordable housing market, many are choosing to double up as families,” explains Lautz. “Cost savings are a major factor, with young adults returning home – or never leaving – due to prohibitive rental and home prices. Meanwhile, elderly parents and relatives are moving in with family members as home buyers reprioritize what matters most to them.”

Real estate agents played a crucial role in the homebuying process, with 86% of all buyers utilizing their services – the highest of all information sources used. Agents were the most useful information source in the home search process.

Eighty-eight percent of home purchases were made through a real estate agent or broker, demonstrating the continued importance of agents in the homebuying process. Nearly 90% of buyers each expressed satisfaction with their agent’s responsiveness, knowledge of the purchase process, honesty and integrity, knowledge of the real estate market and people skills. Eighty-eight percent of home buyers would use their agent again or recommend to others.

In 2024, the median down payments were 18% for all home buyers, 9% for first-time home buyers and 23% for repeat home buyers – the highest down payments for first-time home buyers since 1997 and repeat home buyers since 2003. First-time buyers continue to rely on savings (69%); however, 25% used loans or gifts from friends and family, 21% used financial assets and an all-time high of 7% used inheritances. A record 26% of home buyers paid cash for their homes.

The typical age of home sellers reached 63 years, the highest ever recorded. The share of married couples selling their homes was 69%, an increase from 65% last year, marking the first increase in four years.

For sellers, the most cited reason for selling their home was the desire to move closer to friends and family (23%), followed by home was too small (12%), home was too large (11%) and neighborhood becoming less desirable (10%).

“Family support systems are influencing buying and selling decisions,” said Lautz. “Being close to friends and family is the top reason to sell, while buying a home convenient to friends and family continues to grow in importance. Today’s buyers are less likely to be concerned with their work locations when purchasing, perhaps because of a higher share of older repeat buyers and remote work flexibility remaining a factor.”

Ninety percent of sellers sold with the assistance of a real estate agent, up from 89% last year, and only 6% were for-sale-by-owner sales, an all-time low. Most sellers (87%) said that they would definitely (72%) or probably (15%) recommend their agent for future services.

“Most home buyers and sellers find it valuable to use an agent who is a Realtor® to help them maneuver through the complicated homebuying and selling processes, especially in a challenging housing market,” said NAR President Kevin Sears, broker-associate of Sears Real Estate/Lamacchia Realty in Springfield, Massachusetts. “Realtors® provide critical knowledge and expertise that ensure a successful transaction.”

Methodology

Data gathered in the report is based on primary residence home buyers. In July 2024, NAR mailed out a 127-question survey using a random sample weighted to be representative of sales on a geographic basis to 167,750 recent home buyers. The buyers must have purchased a primary residence home between July 2023 and June 2024. NAR received 5,390 responses from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 3.2%. Per the Realtor Confidence Index, 83% of home buyers were primary residence buyers in 2023, which accounts for 4,756,000 homes sold in 2023 (among new and existing homes). Using that calculation, the sample at the 95% confidence level has a confidence interval of plus-or-minus 1%.

© 2024 National Association of Realtors® (NAR)

Contract Signings Signal Market Improvements

 By Melissa Dittman Tracey

NAR Chief Economist Lawrence Yun forecasts improved home sales, slower appreciation and falling mortgage rates over the next two years.

CHICAGO — More home buyers signed contracts for a home purchase in September, a sign that the housing market may be on the mend after a sluggish summer.

The National Association of Realtors®’ Pending Home Sales Index  a forward-looking indicator of home sales based on contract signings — jumped by 7.4% in September compared to August, NAR reported Wednesday. Contract signings also were up 2.6% from a year ago.

“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” says NAR Chief Economist Lawrence Yun. Pending sales rose by nearly 10% in the West last month, followed by a 7.1% gain in the Midwest, 6.7% increase in the South, and 6.5% gain in the Northeast. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady,” Yun says.

Sales of newly constructed and previously owned homes could rise by 10% in each of the next two years, Yun predicts, noting that “sizable pent-up housing demand” is likely to be unleashed in the coming years. First, however, the housing market must dig itself out of a rut: Existing-home sales hit a 14-year low in September as prospective home buyers pull back due to high prices.

What likely triggered more contract signings

Home buyers in September found more inventory options, which may have helped boost pending home sales last month. Housing inventory was up 23% in September compared to a year ago, although that’s still down by about 25% from pre-COVID levels, according to NAR.

The uptick in contract signings last month also came as the Federal Reserve cut its benchmark interest rate for the first time in four years. The Fed’s rate is not directly tied to mortgage rates, but the cut initially encouraged movement in the market and helped bring mortgage rates down to 6.18% in September (compared to 6.5% in August). The lower rates may have created some urgency among home buyers. The September drop in rates translated to about a $300 savings in monthly mortgage payments on a typical $300,000 mortgage compared to just a few months ago, NAR’s data shows.

That said, mortgage rates have moved upwards in recent weeks: The 30-year fixed-rate mortgage averaged 6.54% last week, according to Freddie Mac.

So, will the latest sales uptick last?

Yun believes home sales will continue to climb, particularly as home affordability improves. Here’s what he predicts for the housing market over the next two years:

  • Higher home sales: “After two years of sluggish home sales in 2023 and 2024, existing-home sales are forecasted to rise,” Yun says. He predicts existing-home sales to increase to 4.47 million in 2025 and to more than 5 million in 2026.
  • Slower home price appreciation: “During the next two years, expect a slower rate of growth in home prices that’s roughly in line with the consumer price index because of additional supply reaching the market,” he adds. Yun predicts the median sale price for existing homes to increase to $410,700 in 2025 and $420,000 in 2026. However, the pace of home price hikes is slowing, he says.
  • Falling mortgage rates: Further helping home affordability, Yun also predicts that the 30-year fixed-rate mortgage will decrease to 5.9% in 2025. However, he says mortgage rates likely will increase to a 6.1% average by 2026.

Click here to read Yun’s full housing forecast.

© 2024 National Association of Realtors® (NAR)