During the pandemic, millions of Americans broke into the housing market thanks to sub-3% mortgage rates. But as mortgage rates and home prices started to climb—and while wages remained relatively stagnant—achieving the American dream feels further out of reach than ever. Indeed, the average age of a first-time home buyer climbed to an all-time high of 40 years, according to the National Association of Realtors.
“The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement. “The share of first-time buyers in the market has contracted by 50% since 2007—right before the Great Recession.”
While there’s been short-lived glimmers of hope that housing affordability could improve, like mortgage rates dropping from a 2023 peak of 8%, experts agree it’s “very unlikely” buying a home will become more affordable any time soon.
According to Realtor.com data shared with Fortune, at least one of three things would need to happen: mortgage rates would need to fall to 2.65%; median household income would need to rise by 56%; or home prices would need to decline by 35%. For the mortgage calculations, Realtor.com assumed a 10% down payment, historical income data reflected median household income from the latest Census, and home prices are based on the National Association of Realtors existing home sales price, and mortgage rates came from Freddie Mac, Hannah Jones, Realtor.com senior economic research analyst, told Fortune.
