First-time homebuyers made up 43% of new-home sales, according to the February National Association of Home Builders/Wells Fargo Housing Market Index survey. Two-thirds of builders surveyed said first-time buyers accounted for more than 20% of their home sales for the past 12 months. This is a large increase from just five years ago when first-time buyers accounted for just 19% of new-home sales. From April 2018 to February 2021, the share surged from 27% to 43%—likely a result of low mortgage rates, says NAHB.
The reason for the upward trend before 2018 is less clear, but declining interest rates undoubtedly contributed to the post 2018 surge. The rate on 3-year fixed rate mortgages in the Freddie Mac Lender Survey declined from over 4.75 percent in October 2018 to under 2.75 percent by the end of 2020.
For comparison, the National Association of REALTORS® (NAR) has tracked first-time buyers in the broader market that includes purchases of existing homes since the 1980s. According to NAR’s latest Profile of Home Buyers and Home Sellers, first-time time buyers accounted for one-third of that broader market in 2018 and 2019, somewhat below the historic norm of 40 percent.
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