Rising home prices and high mortgage rates are requiring home buyers to have significantly higher incomes to afford housing purchases. The median household income for home buyers jumped to $107,000 from $88,000 last year, according to the National Association of Realtors’ (NAR) 2023 Profile of Home Buyers and Sellers. The 2023 Profile of Home Buyers and Sellers tracked transactions between July 2022 and June 2023.
“Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped nearly $20,000 and topped six figures for only the second time in our records,” says Jessica Lautz, NAR deputy chief economist and vice president of research.
Lautz says “well-off” home buyers were able to have bids accepted in a still-competitive housing market by offering larger down payment or paying in cash.
The share of first-time buyers increased to 32% from last year’s historic low of 26%. Despite the increase, though, the share of first-time buyers is well below the 38% annual average since 1981, according to the NAR. The median income for first-time buyers was nearly $25,000 higher than last year. Additionally, the typical ages for first-time—35 years—and repeat—58 years—buyers decreased from record highs of 36 years and 59 years, respectively, last year.
“First-time buyers tiptoed back into the market this year with less competition and fewer multiple-offer scenarios,” Lautz says. “While the share of first-time buyers is still near historic lows, it is higher than last year.”
Seventy percent of recent buyers did not have a child under the age of 18 in their home, the highest share recorded by NAR. By comparison, in 1985, 42% of households did not have a child under the age of 18. The share of married couples—59%—was its lowest since 2010, while single female and single male buyers increased to 19% and 10%, respectively. Fourteen percent of buyers purchased a multi-generational home, with common reasons for doing so including the ability to take care of aging parents, the ability to save money, and the ability to accommodate children or relatives over the age of 18 moving back home.
Eighty-one percent of buyers were White/Caucasian, 7% were Hispanic/Latino, 7% were Black/African America, 6% were Asian/Pacific Islander, and 6% identified as some other race, according to NAR. Ten percent of buyers were born outside of the U.S., up from 8% last year.
“Home buyers in the past year were more diverse, both racially and ethnically, with increases noted among minority buyers, buyers who were born outside of the U.S. and buyers whose primary language is not English,” Lautz says.
Recent buyers are also finding homes much closer to where they previously lived. The median distance between homes purchased and previous homes was 20 miles, a decline from 50 miles last year and closer to the previous norm of 15 miles. Suburbs became more popular, representing 47% of purchases in 2023, and small towns and rural areas remain more popular than they were in the 2017 to 2021 time period.
The typical down payment for first-time and repeat buyers were 8% and 19%, respectively, the highest levels since 1997 for first-time buyers and 2005 for repeat buyers. First-time buyers increased their reliance on financial assets, using the sale of stock or bonds (11%), 401k or pension (9%), IRA (2%), and the sale of cryptocurrency (2%), according to the NAR. Eighty-nine percent of recent buyers purchase their home through a real estate agent or broker, an increase from 86% last year.
“Sellers also relied on real estate agents and brokers to price their home competitively and market it to potential buyers,” Lautz says. The average home seller was 60 years old and typically had lived in their home for 10 years before selling.
