One reason new and existing home sales are sluggish is because the share of young, first-time home buyers is at historically low levels, stalling the still nascent housing recovery, according to an annual survey released Monday by the National Association of Realtors.
Only 33 percent of the existing homes sold this year were purchased by first-time buyers, down from 38 percent last year to the lowest level since 1987, the NAR reports. The Realtors group polled more than 6,500 people who bought a primary residence between July 2013 and June 2014.
According to the NAR, the first-time buyer share of home sales has typically hovered around 40 percent. Lawrence Yun, NAR chief economist, said first-time home buyers face many obstacles on their path to homeownership.
Yun said younger, first-time buyers are facing high student loan debt, rising rents and a weak job market, making it harder for would-be buyers to save for a down payment and qualify for a mortgage. Student loan debt stands at $1.2 trillion in the second quarter of 2014, according to the Federal Reserve Bank in New York.
“Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” said Yun. “Adding more bumps in the road, is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”
The median age of first-time buyers was 31, unchanged from the last two years, and the median income was $68,300 ($67,400 in 2013). The typical first-time buyer purchased a 1,570 square-foot home costing $169,000, while the typical repeat buyer was 53 years old and earned $95,000.
The NAR annual survey also found that people are staying in their homes longer than in the past. The amount of time a typical homeowner stays in one house rose to 10 years in the most recent survey, from six years in 2007.