First-time homebuyers—the lifeblood of the housing ladder—have nearly disappeared. Their share of the market has dropped to the lowest level in ten years, even as the number of homes for sale surged.
Inventory rose 20% year over year, making 96 straight weeks of growth and the highest level of supply since 2019, back before the pandemic upended everything. And it’s not just quantity; it’s affordability, too. Zillow found that nearly 500,000 homes nationwide were affordable this summer—meaning a buyer would spend no more than 30% of the median US income on their monthly payment. That’s up 20% from last year and the best affordability window since August 2022.
So what’s going on? In short: interest rates. Rising supply and softening prices can only do so much when mortgage rates hover at nosebleed levels. Many first-time buyers simply can’t bridge the gap between affordability “on paper” and affordability “at the bank.”
But here’s the twist: rates are finally easing. If that trend continues, we may be looking at a pent-up wave of demand—a generation of sidelined buyers to jump back in. Will this fall mark the year of the “first-time buyer comeback”? Or will scar tissue from years of high prices and high rates keep them frozen on the sidelines?
Either way, the stage is set: supply is up, affordability is up, and all eyes are on whether interest rates can unlock the door for America’s missing homebuyers.
Here's an interesting analysis of 'when' real estate will return to ‘normal’ by Redfin: https://www.redfin.com/news/return-to-normal-housing-2025/?utm_campaign=pb&utm_medium=newsletter&utm_source=morning_brew
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Adam Pretorius is a top-producing luxury real estate agent in Iowa City. Follow for more real estate news and insights.
