A lack of homes and surging prices are hitting first-time buyers particularly hard heading into the spring season. The share of first-time homeowners dropped to 29% of all existing-home sales in January, down from 33% this past year, as reported by the latest housing report from the National Association of Realtors®.
Spring will not be attractive for first-time buyers
“First-time buyers are typically people with a tighter budget,” says Joseph Kirchner, realtor.com senior economist. “They’re looking for homes on the more affordable end of the market, but that is where the lack of homes is most severe. … There’s plenty of demand, but people just cannot find a home on the market that meets their needs and they can afford. It’s not a good start for the spring market. The shortage will continue.”
In January, there had been 15.5% fewer existing homes selling for $250,000 or less when compared to a year ago. At the same time, the most significant gains in homes were from those selling for $500,000 and up, which saw a 25% uptick.
Existing-home prices were up in every major region of the U.S. The West had the highest priced homes at a median of $362,600 in January, an 8.8% increase from over a year ago. The Northeast’s median prices reached $269,100 in January, up 6.8% annually. The South’s median home price of $208,200 is up 4.3% from a year ago, while the Midwest’s $188,000 median price is up by 8.7%.
“It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth,” Lawrence Yun, NAR’s chief economist, said in a statement.
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