The U.S. Housing Market in 2025: Why the Average Buyer Is 56 and First-Timers Are Struggling

If you’re hoping to buy a home in 2025, you’ve probably noticed the deck feels stacked against you. Prices are through the roof, inventory’s tighter than ever in some regions, and the typical homebuyer? They’re now 56 years old—up from 49 in 2023, according to the National Association of Realtors (NAR). That’s not just a random stat; it’s a signal of a market in flux. From soaring costs to a supply crunch, here’s what’s driving this shift, who’s actually buying, and why younger folks—especially millennials and Gen Z—are finding the American Dream tougher to grasp than ever.

A Historic Jump in Buyer Age

Let’s start with that 56 number. The NAR’s been tracking this since 1981, when the median homebuyer was a spry 31. Even in the early 2010s, it hovered in the low-to-mid 40s. A seven-year leap in a single year is jaw-dropping—and it’s not just because buyers are aging naturally. First-time buyers are older too, creeping up from 35 to 38, while repeat buyers jumped from 58 to 61. Meanwhile, first-timers’ share of the market plummeted from 32% to a record-low 24%. Something big is happening, and it’s tied to economics, demographics, and a housing market that’s increasingly favoring the haves over the have-nots.

The Affordability Crunch

The culprit? Affordability—or the lack of it. Home prices have surged 47% since early 2020, with the median U.S. home hitting $435,000 in 2024. Mortgage rates aren’t helping either—just shy of 7% for a 30-year fixed loan as of January 2025, double what they were five years ago at 3.51%. Back in 2021, rates bottomed out at a historic 2.65%, making monthly payments a breeze by comparison. Today, a $435,000 home with 20% down costs about $2,300 a month at 7%—versus $1,400 at 3%. That’s a budget-buster for younger buyers, who often lack savings or equity to lean on.

Renters aren’t faring much better. With rents eating up 31% of income on average, saving for a down payment feels like chasing a mirage. Friends of mine in the New York area have been house-hunting for nearly a year—still nada. The result? First-time buyers now need a household income of $97,000 (up from $95,500), and the overall buyer average hit $108,800—both record highs. Wealthier, older buyers, often with equity from previous homes, are better equipped to navigate this mess.

The Lock-In Effect and Inventory Woes

Why aren’t more homes hitting the market to ease the pressure? Enter the “lock-in effect.” Homeowners who locked in 3% (or lower) rates during the pandemic aren’t selling. Why would they? Trading up means a pricier home at double the interest rate. The average existing mortgage rate is still around 4%, so even a slight dip in new rates won’t tempt many to list. Add a nationwide shortage of four million homes—thanks to lagging construction, high material costs, and labor shortages—and supply’s stuck in the mud. The South has more homes lingering on the market, which might cool prices there, but in the Northeast, like New York and Connecticut, inventory’s at historic lows. Homes are selling at the slowest pace in five years—73 days on average last month, up from 35 days during the 2022 pandemic boom.

Who’s Buying—and How?

So who’s actually closing deals? Older repeat buyers are the heavy hitters. In 2024, 26% of purchases were all-cash—a record high—often fueled by the $17.6 trillion in U.S. home equity. These buyers, typically in their 60s, can skip mortgages or plunk down hefty down payments—23% of the purchase price versus 8% for first-timers. The median down payment overall rose to 18%, the highest since 2003. This creates a stark divide: those already in the market with cash or equity versus younger buyers scraping by. Pending sales tanked 5.5% in December 2024—the first drop in five months—while January saw an 11% uptick in homes listed compared to last year. Buyers are weary, and the market’s feeling it.

How We Got Here: The Pandemic Shake-Up

The COVID-19 pandemic flipped the housing script. Remote work let people ditch city centers for bigger homes with yards and home offices. The Fed slashed rates to juice the economy, pushing 30-year mortgages below 3% at times. Stimulus checks and less spending on travel or dining out padded savings for down payments. It was a frenzy—homes flew off the market in 35 days in 2022. But as rates climbed to 6.94% by late 2022 and held near 6.9% in 2025, that boom fizzled. Homeowners with ultra-low rates dug in, and the market stalled. We’re still adjusting to this “new normal.”

Demographics Tell a Story

The buyer pool’s shifting too. Married couples, once 73% of buyers in 1981, fell to 62% in 2024. Single women (20%) and single men (8%) are stepping up, and 70% of buyers don’t have kids under 18—reflecting lower birth rates and an aging population. White buyers still lead at 83%, but Hispanic, Black, and Asian buyers are inching up to 6-7% each. It’s a market splitting into two camps: older, wealthier folks with resources, and younger buyers needing higher incomes and more time to break in.

What’s Next for Housing?

When will this thaw? Experts say mortgage rates need to drop significantly from 7% to unlock demand. A brief rate dip last September sparked a flurry of activity, hinting at pent-up interest. Some propose building three million new homes—a policy idea floating around—but that’s years away. For now, millennials and Gen Z, in their peak homebuying years (20s to early 40s), face a steep climb. Starter homes are scooped up by investors or second-home buyers, and condos or townhomes aren’t much easier to snag. The ladder’s higher for first-timers, while those already on it—especially older buyers with cash—keep climbing.

The Bottom Line

The U.S. housing market in 2025 is a tale of two realities: older, equity-rich buyers thriving, and younger hopefuls stuck on the sidelines. Without lower rates or a big boost in inventory, this could drag on. For now, the data paints a picture of a market tilted toward those who’ve already made it—leaving the rungs out of reach for everyone else. Have you felt this crunch?