First-Time Homebuyers Currently Make Up 50% of All Buyers

Zillow reported on Wednesday (8-23-23) that according to its 2023 Consumer Housing Trends Report, first-time buyers now make up 50% of all home buyers, up from 45% in 2022 and 37% in 2021. Zillow estimates that the share of first-time buyers has not been this high since 2010, when there was a first-time home buyer tax credit.

First-time buyers are making gains relative to repeat buyers. Zillow research data reveal a large majority of homeowners with mortgages have locked in a rate below 5% and are almost half as likely to consider moving. First-time buyers are making up a large piece of a smaller pie, as home sales and inventory shrink, Zillow says; however, this significant rise in the share of first-time buyers helps explain what’s driving demand and keeping upward pressure on prices in a market where mortgage rates exceed 7.0%.

Commenting on the report, Zillow Senior Population Scientist Manny Garcia said:

“High mortgage rates and a shortage of inventory is keeping would-be buyers in their current homes. A greater relative share of first-time buyers is filling the gap, and they’re competing against each other for the limited number of affordable starter homes on the market.”