What is the average age of first-time homebuyers (and why is it getting higher)?

Buying your first home is a major life decision and generally aligns with other factors, like career stability, feeling settled in your location, disposable income and maybe even thoughts of growing a family. 

But is there a right age when these factors should be in place? And are these the factors Americans should consider when deciding to become a homeowner for the first time? 

In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.

A more notable stat, however, is that only 26% of homebuyers in 2022 were first-time homebuyers — the lowest percentage since the NAR started tracking the metric. It’s also a dramatic decrease from 2010, when first-time homebuyers accounted for 50% of all homebuyers.¹ 

The increase in age and decrease in first-time homebuying in 2022 shouldn’t come as a shock. Home prices have skyrocketed in the last few years, with the median home sales price rising to $428,700 in 2022 — an increase of $58,900 from 2021.²  

These increases are happening most notably in urban areas. For example, the typical home value in Washington D.C. is $826,124 versus $177,710 in Arkansas.³ As a result, first-time home buyers are moving farther away from their current home to buy a more affordable house, as the median distance that first-time homebuyers moved from their previous location was 50 miles.

All this is to say that first-time homebuying looks a lot different today than it used to. Keep reading as we explore how homeownership has changed at the state and national level and reveal how age affects home insurance rates.

Homeownership rates by state

The cost of owning a home has skyrocketed — especially in urban areas, making the best cities for homeownership different from what they used to be. As a result, there’s been a decrease in Americans buying homes in urban areas and an increase in Americans moving farther from their current location to buy a home. 

In 2022, the state with the highest homeownership rate was West Virginia, with a rate of 77.8%. At the bottom of the list, Washington, D.C. had a homeownership rate of 44.7%.⁴

Some other notable takeaways at the state level include: 

• Washington, D.C.’s homeownership rate has declined by 2.4% since 2005. 
• New York’s homeownership rate has declined by 4.11% since 2005
• Between 2020 and 2022, the homeownership rate in Texas has declined by 6.21%.

Homeownership rates by year

State statistics show that increases in the average cost of living lead to lower homeownership rates — in some states more than others. But what does it look like on a national scale? And how have homeownership rates shifted over time? 

The homeownership rate in Q3 of 2022 was 66%, a slight increase from previous years. However, since 2000, homeownership has dropped significantly, decreasing from 68% in 2003 to its lowest point in decades — 63% in 2016.⁵

The reason is: Homes are becoming less affordable. Research shows that 68 out of 100 Americans could afford a home in 1960. However, in 2022, only 43 out of 100 Americans could afford a home.

Homeownership rates by generation

The shift in the age of first-time home buyers, along with the general decrease in younger homeowners, is most apparent on a generational scale. 

Millennials, especially, are buying homes later in life compared to preceding generations. Some particularly telling statistics include: 

• Younger millennials (23 to 31 years old) comprise only 18% of the share of homebuyers 
• 60% of older millennials (roughly 40-42 years old) own a home. At that age, 73% of the Silent Generation owned homes, 68% of Baby Boomers owned homes and 64% of Generation X owned homes.⁶
• 63% of Millennials haven’t saved for a down payment on a home. 

The final statistic begs an interesting question: Why aren’t more millennials saving for a down payment? According to Apartment List’s 2022 Millennial Homeownership Report, eight out of 10 millennials want to own a home someday but haven’t been able to save due to student loan debt and higher costs of living.⁷

First-time homebuyer statistics

With upward trends in the cost of homebuying, many Americans can’t afford a mortgage and, as a result, are deciding to rent for longer. While these renters may be considered high-income individuals, they prioritize paying off student loans and credit card debt — rather than saving for a down payment. 

Some statistics that highlight this trend include:

• The average home price in 2022 was $348,000.
• The median take-home income of first-time homebuyers in 2020 was $47,952.⁸
• The median down payment for a single-family home at the end of 2021 was $26,000. This is up 19% from 2020.⁹
• 29% of homebuyers say saving for a down payment is the most difficult part of buying a home.¹⁰
• The number of higher-income renters has doubled in the last ten years.¹¹

Why are Americans waiting until later in life to buy their first home?

While rising home prices are a top reason that Americans are putting off buying their first home, there are a number of other factors contributing to this increase in age. Some of these include: 

Inflated home prices 

According to CoreLogic, national home prices rose 8.6% year over year from November 2021 to November 2022.¹²

While this growth may slow in a couple of years, it doesn’t change the fact that it’s unusually expensive to buy a home right now, encouraging some potential buyers to wait and see how the housing market will move.  

Student loan debt  

As of September 2022, student loan debt in America was at around $1.76 trillion, with one out of five adults claiming to be in student loan debt.¹³

According to the NAR, 60% of millennials who don’t own a home say that student loan debt is delaying their plans to buy a home. With housing becoming more expensive, younger people feel forced to decide between paying off student debt or committing to another expense, like buying a home or saving for retirement.¹⁴

Career changes 

20% of Americans have changed careers since 2020 — 55% of which were millennials.¹⁵  

With more Americans changing careers at the time when they’d traditionally buy a home, there’s a lesser chance of Americans settling into a mortgage earlier in life. 

While COVID-19 may have been the major prompt for “The Great Resignation” in 2021 and the beginning of 2022, layoffs have been the story of the latter part of 2022 and early 2023. In the first month of 2023, more than 20 major corporations, headlined by Amazon, Google and Microsoft, have participated in mass layoffs 

Competition from investors

According to a study from CoreLogic, purchases of single-family homes by investors increased from 14% in June 2020 to almost 27% by September 2021.¹⁶

In most cases, deep-pocketed investors, like home flippers, Wall Street-backed institutions and online homebuying companies, are able to outbid individuals and families when it comes to competing for a home.¹⁷

Does your age affect your purchase price?

Age doesn’t directly affect the price you’ll have to pay, but it does have a general bearing on your credit score and the amount of disposable income you have access to. 

When applying for a conventional loan, you typically need a credit score of 620. With a lower score, it’s unlikely that a bank will approve you for the loan. Building this credit score will take time, which makes it more difficult to purchase a home at a young age.¹⁸ 

Many financial advisors adhere to the 28% rule when recommending how much you should spend on your mortgage payments. This rule suggests that you should spend no more than 28% of your monthly gross income on your mortgage, which includes principal, insurance, taxes and interest.¹⁹

While age doesn’t have a bearing on whether or not you can adhere to the 28% principle, the longer you work and accumulate income, you’ll be more likely to pay your mortgage without financial strain.

Advantages of buying a house at a younger age

You shouldn’t buy a home until you’re financially able; however, if you can afford a mortgage at a younger age, there are some clear advantages of owning over renting. 

Less money spent on rent 

Owning a home can protect you from rent increases at different complexes and properties. When you buy a house, you’re locked in at the price of the home and will have the same monthly payments throughout your time as the homeowners — regardless of the ebbs and flows of the housing market. 

Increases to credit score

When you start shopping around for mortgages and eventually secure one, your credit score will initially dip. However, if you’ve never owned a home before, adding a mortgage to your credit history and making consistent on-time payments will help improve your score over time.²⁰

Tax deductions

 Unlike renters, homeowners can take advantage of mortgage interest deductions. This itemized deduction of mortgage interest allows homeowners to decrease their taxable income. 

Additionally, if you sell your home down the road, you may qualify for capital gains tax breaks, which allows you to take home the difference in the value of the home when you bought it and how much you sold it for.²¹

Forced saving

Buying a home is a way to save without even knowing it. Consider this: you buy a home and live in it for 8 years, which is the average length of homeownership. When you move and sell your home, you accumulate the value of your home. 

Barring a recession or a market crash, home values tend to rise over time, making it likely you’ll profit from the sale of your home. In a sense, your home does the saving for you.

When is the right time to buy a home?

Regardless of external factors like the housing market, there are a few personal milestones you’ll want to secure before committing to a home. Some signs that you’re ready to buy a home include: 

• You’re debt free: When you’ve paid off your student debt and have zero credit card debt, you’re in a good position to start looking for a home. 
• You can afford a down payment: A down payment is the first large payment you’ll commit to your home, so you should ensure you’ve saved enough. 
• You have a steady income: As a homeowner, you’ll be responsible for regular monthly payments, so you need to have regular income flowing in. 
• You have a good credit score: A score of 620 or higher is typically needed to buy a home, so make sure your credit is in good shape. 
• You’re settled in one place: Mortgages tend to be 15-30 years long. This doesn’t mean you need to stay in your home for 30 years, but you should be committed to the city or town you’ve chosen to live in. 
• You’ve budgeted with all the costs of homeownership in mind: From maintenance to closing costs, there are many costs associated with home ownership. Make sure you’ve considered them all before you buy. 

It’s also important to note that the process can be more affordable with first-time homebuyer programs. These federally-backed loans and grants provide different funding options for first-time home buyers.

Does your age affect your home insurance rates?

Your age will have no bearing on your home insurance rates. However, similar to affording a home, your age may have an impact on your credit score, if you haven’t had enough time to build up to a 620 or higher. 

You shouldn’t let your age deter you from shopping around for different quotes, however. Use The Zebra to compare different home insurance companies and see the best fit for you.