(TND) — The median household income for home buyers shot up roughly $20,000 this year, showing just how much lower-income families are being priced out of the market.
That was among the findings in the newly released Profile of Home Buyers and Sellers from the National Association of Realtors.
NAR calls this its “flagship” report, which it has published since 1981.
“The biggest thing that struck me is just how high the household income of recent home buyers increased,” said Jessica Lautz, deputy chief economist and vice president of research.
The median household income for home buyers jumped to $107,000 from $88,000.
The difference in income for first-time buyers was even more dramatic: nearly $25,000 above last year.
First-time buyers rebounded a bit this year, though Lautz said their share is still at historic lows.
First-time buyers made up 32% of the market, up from 26% last year but below the 38% annual average since 1981.
And the typical age of first-time buyers (35 years) is just a tick down from the record high of 36 years last year.
This isn’t simply the same group of first-time buyers with fatter paychecks.
Folks “need to be wealthier to be able to enter into the housing market,” Lautz said.
Home buyers face “a laundry list” of challenges, she said.
There’s limited affordable inventory.
Interest rates have risen to 20-year highs.
And home prices keep going up.
Add in financial stressors outside of the housing market, such as student loan repayments and rising child care costs, and it’s gotten much more difficult to save up for a down payment, she said.
Eighty percent of buyers financed their home purchase, up slightly from 78% last year but still down from 87% two years ago, NAR said.
And the down payments are larger.
The typical down payment for first-time buyers is now the highest since 1997. The typical down payment for repeat buyers is the highest since 2005.
NAR said more first-time buyers are cashing in investments, such as stocks or their 401k, in order to finance the purchase of a home.
And nearly a quarter of first-time buyers used a gift or loan from friends or family for the down payment.
Fewer recent buyers have a child at home, and fewer are married.
The 70% of recent buyers who don’t have a child in their home marks the highest share recorded, NAR said.
And just 59% of recent buyers were married couples, the lowest share since 2010.
The vast majority of buyers, 87%, purchased a previously owned home.
NAR’s latest data shows the median existing-home sales price sat at $394,300 in September.
But the number of sales in September was down about 15% from last year.
There are fewer homes on the market, as some homeowners hold onto their locked-in lower mortgage rates.
Freddie Mac says the national average for a 30-year fixed-rate mortgage is 7.5%.
A buyer could’ve locked in a 2.65% mortgage rate in January 2021.
Lautz previously told The National Desk that the difference between the current rate and the low rate in early 2021 comes out to about $970 a month on a $400,000 home.
She said Tuesday that we’re in a seller’s market in most places.
Lautz said they’re expecting mortgage rates to drop into the 6% range by the spring, “Which will be welcome relief to home buyers on the sidelines.”
May through August are the busiest months, and Lautz said they’re hoping there’s more housing inventory by then to support the demand.
Lower rates could create much-needed movement in the market. But it remains to be seen how willing homeowners will be to put their homes up for sale if mortgage rates still exceed their locked-in rates.
And Lautz said they expect home prices to continue to rise.
Over the last year, buyers typically purchased their homes for 100% of the asking price, with 25% purchasing for more than the asking price, NAR said.
The typical home that was purchased was 1,860 square feet, had three bedrooms and two bathrooms, and was built in 1985.
Recently sold homes were on the market for a median of two weeks, unchanged from last year.
