Emerging Trends Among America’s First-Time Homebuyers: A 2024 Report

Homeownership is a dream for many people, and there are myriad practical benefits to having a house, including building equity and tax benefits. However, at the same time, plunging into the real estate market is stressful. Owning a house is a major financial commitment, especially with the median home price in the U.S. rising by more than $100,000 since 2020. This makes it increasingly difficult for those purchasing a home for the first time. We conducted a survey to find out more about who first-time homebuyers are, what they’re concerned about, and the challenges they face. 

Key Findings

Here’s what our survey results revealed:

 

• 70% of first-time home buyers are Gen X and less than 4% are Gen Z.

• 73% of Gen Z first-time buyers earn over $75,000 annually, highlighting that homeownership remains out of reach for lower-income earners in this generation.

• Single-family homes are the top choice across all income levels, with 90% of home buyers opting for this style.

• 73% of first-time homebuyers, including those earning under $50,000 annually, purchased without outside financial assistance.

• 70% of homebuyers completed their purchase within six months, emphasizing the pressure first-time buyers face in a competitive market.

• More than half (57%) of home buyers are concerned about affording mortgage payments if faced with job loss or unemployment.

• Half of first-time buyers are married couples, and 40% made the purchase solo. 

Demographics: Most First-Time Homebuyers Earn Upwards of $50K

The median cost of housing may make it seem like home ownership is out of reach for people who don’t earn six or more figures. However, our research tells a different story. We found that 1 out of 5 homebuyers earned between $50,000 and $74,999 annually.

 

The average weekly salary for workers in the U.S. is $1,165, as of the third quarter of 2024, which translates to $60,580 per year. This means the average income earner is on par with many other first-time homebuyers in terms of salary. 

 

That said, factors like age, income level, and employment situation have an impact on homebuying trends.

Age

A majority of the first-time buyers are older — 36% are baby boomers and 34% are Gen X. 

 

Most younger buyers (25%) are millennials. Gen Z only made up 4% of first-time homebuyers.

Income Levels

The income brackets of first-time homebuyers varied by generation. 

 

• 25% of baby boomers earned between $25,000 and $49,999 annually and 21% took home $50,000 to $74,999. 

• 22% of Gen X buyers earned $50,000 to $74,999, and 19% each in the $75,000 to $99,999 and $100,000 to $149,999 brackets. 

• 21% of millennial buyers earned $50,000 to $74,999, while 22% were in the $75,000 to $99,999 range. 

• 63% of Gen Z buyers earned more than $75,000 per year, with only a quarter earning less than $50,000. 

 

Other surveys of Gen Z suggest general financial anxiety due to uncertainty in the economy, growing up during the 2008 housing crisis, and coming of age during the COVID-19 pandemic. This explains why primarily higher earners were entering the housing market. 

Work Arrangements

Flexible work arrangements, like remote or hybrid options, strongly influence homebuying choices.

 

• 30% of first-time home buyers work in an office full-time. 

• 15% are fully remote employees, while 18% are hybrid.

• 37% of first-time buyers were retired or earned income from other sources, such as small businesses or investments. 

• The biggest age group in this category is baby boomers (65%). 

 

Further, both in-office and hybrid work arrangements could require someone to relocate from another state. State-to-state moves are extremely common, with 8.2 million people crossing state borders while moving in 2022. 

Timing: Few Bought Their Home Within the Last Year

2023 saw the lowest number of purchases in recent times, with 4.09 million sales in America. That’s even less than the 4.12 million sold during the height of the housing crisis in 2008. 

 

This recent dip in home sales extends to first-time buyers. 80% of Americans purchased their home three to four years ago, with 13% buying between one and three years ago. Only 7% bought their home within the last 12 months.

 

Other influences include high inflation. In 2022, the 8% inflation rate was the highest in the U.S. since 1980. Though inflation dropped to 4% in 2023, that figure was still well above average and, outside of the previous year, the highest since 1990. 

Type of Home Purchased

 

Despite the recent rise in home prices, most buyers haven’t opted for smaller choices like condos or townhomes. Instead, nearly 90% still chose single-family homes. This trend extended to lower income brackets, with those earning $25,000 to $50,000 and $50,000 to $75,000 opting for single-family houses at the same rate. 

 

However, more than 3 in 4 buyers chose previously owned homes over newly constructed ones. 

Homeownership Situation

 

Are homebuyers working with their real estate agents to find a place to raise a family? Half of first-timers are married couples, while 40% are single. Cohabitating (not legally married) couples and family members or friends who purchase a home together each accounted for only 4% of first-time home buyers. 

Experience: Stress Is a Big Factor

The following three areas offer some insight into the search and purchase experience for first-time homeowners. 

Duration of the Process

One-third of first-time buyers spent less than three months between the start of their search and making a purchase.

 

• 70% closed on their home within six months of starting their house hunt. 

• 30% took longer than six months.

• 10% extended their search for a year or more.

Stress Levels

9 out of 10 buyers find the home buying process stressful. Additionally, stress levels are similar across generations. 46% of Gen X and baby boomers experienced significant stress while buying their homes. That figure dropped slightly to 47% for millennials and rose to 48% for Gen Z. 

 

This is what caused buyers the most stress:

 

• Affordability: 62%;

• Mortgage approval: 13%;

• Property taxes: 10%;

• Down payment amount: 9%;

• Maintenance costs: 5%.

 

Affordability may be the biggest concern because the average homebuyer spends 30% of their income on housing.

Compromises Made

Buyers may have had the idea of a “dream home” but were willing to make compromises in certain areas. 

 

• 19% compromised on the size (area or number of rooms).

• 18% were willing to stretch their budget.

• 17% chose a less-than-ideal location.

• 14% compromised on the features or condition of the home.

 

Boomers were most willing to compromise on price (20%), Gen X and millennials on size (19% each), and Gen Z on location (22%). 

 

Homebuyers often have to compromise on their current budget to increase their buying power. Here’s what first-time buyers were willing to give up to afford the house they wanted. 

 

• Buying luxury items: 39%;

• Taking vacations or traveling: 26%;

• Eating out: 17%;

• Shopping for non-essentials: 11%;

• Giving up memberships and subscriptions: 7%.  

Financial Aspects: Majority Concerned About Affordability in the Event of an Emergency

57% of first-time homebuyers are concerned about affording mortgage payments if faced with job loss or unemployment. However, a surprising one in four don’t share this worry.

 

Beyond this, only 41% described their home purchase as affordable, while 8% said their home actually felt overpriced. Things look a little different when considering age: 11% of Gen X claim their property was overpriced, and a mere 2% of Gen Z said the same.

 

Overwhelmingly, almost all Americans resisted market pressure and didn’t overpay for their homes. However, absolutely none of Gen Z did, and they were the only generation to do so.

 

Shockingly, households bringing in over $100,000 had more to complain about than those earning less than $50,000. High-earning households were twice as likely to be pressured into overpaying, as well as feel like their house was overpriced.

Financial Assistance

While some buyers received assistance from parents or loved ones, nearly three-quarters didn’t get any help when purchasing their home. Those who did get financial help spent the money in different ways:

 

• 16% received money for their down payment.

• 5% used these contributions to cover closing, legal costs, or repairs.

• 5% put their funds to both the down payment and closing costs.

 

And if people did receive money from loved ones, the amounts varied greatly. 52% of buyers received $10,000 or less from family members, while 16% got contributions of $20,000 or more.

 

Interestingly, people were more likely to get support from family than outside third parties. Only 15% of buyers got support from third-party programs, even though many would qualify in their states. 

Mortgage Application and Lender Selection

Despite concerns about mortgage approval, more than half of buyers (56%) didn’t start the mortgage application process before looking for a home. Once they did apply, 51% only submitted one application, with 34% applying to two lenders. 

 

While some people may have simply been avoiding the stress of repeated loan applications, our data suggests that buyers chose to apply with specific lenders. 

 

39% of borrowers selected mortgage companies due to their promise of low interest rates. Others seemed to value trust and opted for lenders recommended by family or real estate professionals (12% and 15% of buyers, respectively). 14% went to a bank with which they had an existing relationship, such as their primary bank for personal accounts. 

Affordability Concerns

In addition to the initial price tag of the home and getting mortgage approval, 33% of buyers were seriously anxious about affording their mortgages after job loss. And at least 50% feel this anxiety, though to a lesser extent.

 

That said, younger generations are more likely to worry than older ones. 42% of Gen Z buyers and 40% of millennials are stressed about swinging their monthly payments in an emergency, and only 21% of baby boomers feel the same. Presumably, most baby boomers are more confident in their retirement finances than Gen Z and millennials are in their careers.

 

These concerns could be front of mind because of the recent COVID-19 pandemic when unemployment peaked at nearly 15% in April 2020. It may remain a concern as companies adjust, look for redundancies, and adopt automation. These larger changes put those without seniority or experience in an uncertain environment. 

Post-Purchase: Some Feel Satisfied, but Some Still Want More

Homebuyers often see property ownership as a dream or life goal. But do people actually feel satisfied with reaching this milestone? Or do the financial concerns and day-to-day realities overwhelm any sense of accomplishment? 

 

73% said owning a home made them feel closer to achieving the American dream. At the same time, the sense of satisfaction was somewhat muted, with only 12% of people saying their first home was their “dream home.” 

Satisfaction With the Home

Satisfaction with the first home varied significantly by income bracket. The most satisfied people were in the lowest income bracket. Almost 20% of those earning less than $25,000 per year said they’d purchased their dream home, while only 9% of individuals in the $100,000 to $150,000 bracket said the same. 

 

That said, most buyers were satisfied with their decision. When asked to rate their home compared to their dream home on a scale of 1 to 10, more than 50% were in the five to eight range, with eight being the most popular answer (17%). 

 

We also asked how long buyers planned to stay in their home after purchasing it. This provided another way to measure overall satisfaction as well as offering insights into how many buyers were planning to trade up quickly. 

 

Only 9% planned to flip their property within five years. Meanwhile, 30% planned to stay put for the long term (at least 20 years). Even if you counted the 19% who weren’t sure, a vast majority of buyers planned to stay for at least five years, with almost 50% not moving for at least a decade. 

Investment in Home Improvements

Home improvements could be necessary for first-time buyers who sought lower costs by compromising on features or size or purchasing a “fixer-upper” property. Renovations might also help increase equity for resale. 

 

While budget-friendly home improvements are sometimes possible, most repairs and upgrades require an investment. 

 

1 in 10 first-time home buyers are willing to spend $1,000 or less, while 59% are planning for a moderate investment between $1,000 and $10,000. Meanwhile, 29% could invest more than $10,000. 

Financial Preparedness: Most Have Emergency Savings

Other homeowner concerns, such as the cost of emergency repairs, can also lead to finance-related stress. 

 

Most can set money aside for repairs or mortgage payments with their regular income, though 20% of buyers have a side gig or second job that earns extra money to cover the various costs of property ownership.

Additional Income Streams

20% of homeowners felt the need to get a second job to cover homeownership costs, but this practice was very different across generations. 

 

• Baby boomers: 14%;

• Gen X: 20%;

• Millennials: 30%;

• Gen Z: 40%.

 

Interestingly, there’s a correlation between age and taking on additional work, with younger generations being at least twice as likely as baby boomers to do so.

 

The same differences appeared in our data when it came to housing hacks, like converting part of the home for listing on Airbnb or renting out a portion of the house long term. 

 

• Baby boomers: 4%;

• Gen X: 8%;

• Millennials: 14%;

• Gen Z: 20%.

 

Age is a major factor here too — the younger someone is, the more likely they are to pursue a housing hack.

 

These differences could come down to two different things. First, younger buyers might be more aware of the earning potential of trends like the sharing economy. Second, they could have greater concerns about financial stability due to recent economic happenings or being earlier in their careers and not yet confident about their long-term earning potential. 

Emergency Funds

Affordability and economic unpredictability are major concerns. What are new homeowners doing to address these worries? 

 

79% of first-time homeowners have some form of emergency savings, with a quarter keeping between $1,000 and $5,000 in the bank and 17% saving more than $20,000. 

 

First-time homeowners are more aware of the necessity of emergency savings compared to the general public. 73% of Americans have some form of emergency savings, though only 44% can cover unexpected costs exceeding $1,000. In contrast, 72% of first-time property owners have more than $1,000 in their emergency funds. 

Methodology

We gathered our data from 1,000 first-time homebuyers. To get a diverse sample, we included people from across the country. The participants came from 48 of the 50 U.S. states. To ensure accurate responses based on fresh experiences, participants had purchased their homes in the past four years and currently owned the property. 

 

We broke down the participants by generation and income level to get insights into trends or differences based on age or financial status. 

 

Finally, we mixed questions with quantifiable answers about cost, income, and timeframes with questions that focused on the experiences and impressions of first-time homebuyers. This gave us insights into the experience of homebuyers as well as answers to the “where,” “when,” and “how much” questions. 

Fair Use Policy

Buyers, sellers, and others involved in residential real estate need to understand the trends influencing first-time homebuyers and how they’re reacting to a changing market. You are free to share the insights and data in this article for noncommercial purposes. If you do so, please link back to this page so your readers can get the full insights into, and understand the methodology of, our study.