First-time buyers accounted for 30 percent of existing-home sales in August, up from 29 percent in July and from 28 percent a year earlier, according to the National Association of Realtors. The gain came even as all-cash purchases rose to 27 percent of sales and investor and second-home buyers pulled back to 15 percent, from 21 percent a year ago. For the entry-level buyers finally gaining ground, much of what they are buying is inventory that current owners, including retirees trading down, are putting on the market.
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A one-point rise against a shrinking cash-buyer share
First-time buyers made up 30 percent of August’s existing-home sales, according to the National Association of Realtors, up from 29 percent in July and 28 percent in August a year earlier. That is a two-point gain over twelve months, a modest but consistent move in one direction across NAR’s last three monthly reports.
The gain came alongside a pullback from two other kinds of buyers. All-cash sales rose slightly to 27 percent in August, up from 26 percent in July but down from 28 percent a year earlier, while investor and second-home purchases fell to 15 percent, from 21 percent in August a year ago. Fewer cash and investor buyers competing for the same listings leaves more room, mechanically, for buyers who need financing, the group first-time buyers overwhelmingly belong to.
NAR’s chief economist, Lawrence Yun, linked the broader slowdown in sales to mortgage rates, which averaged 6.67 percent in August, saying rates and sales activity move in opposite directions and calling the mild dip in transactions unsurprising given where borrowing costs sit. A first-time buyer, more dependent on financing than a cash buyer, is also more exposed to that rate than the investors and second-home buyers who made up a smaller share of the market this August than a year ago.
The typical listing also spent slightly longer on the market in August, a median of 31 days, up from 29 in July though unchanged from a year earlier, giving buyers who need time to arrange financing, inspections or a mortgage pre-approval, steps a first-time buyer is more likely to need than a cash investor, a slightly wider window than in July.
Where the entry-level supply first-time buyers need is coming from
NAR does not publish a breakdown of who is selling to first-time buyers specifically, but the same report shows total inventory climbing to 1.62 million units in August, up 5.9 percent from a year earlier, with 4.9 months of supply on hand, the highest level in over ten years. A rising and aging pool of homeowners looking to move into something smaller, a condo, a single-story house or senior housing, is one of the sources that keeps starter-priced inventory turning over for buyers who cannot compete on price or financing terms with cash buyers.
Distressed sales, foreclosures and short sales, held steady at 2 percent of transactions in August, unchanged from both July and a year earlier, according to NAR, meaning the modest gain in first-time buyer share is not being driven by a wave of distressed inventory hitting the market. The 30 percent figure reflects ordinary resale activity, not forced sales.
Regionally, sales activity diverged sharply: the Midwest and Northeast both posted year-over-year sales declines of roughly 2 percent in August, while the South held flat and the West fell 2.7 percent, according to NAR’s regional breakdown. A first-time buyer’s odds of finding a listing in the 30 percent share therefore depend heavily on which of those four regions they are shopping in, since supply and price pressure are not moving uniformly across the country.
Prices in those same regions vary widely: the Midwest’s median sale price was $340,400 in August, the lowest of the four regions, while the South’s $366,500 median rose just 0.7 percent from a year earlier. A first-time buyer’s 30 percent share nationally masks a much easier entry point in the Midwest than in the Northeast, where the median price reached $556,900.
Why the shift matters to sellers moving out of starter homes
The median existing-home price nationally was $429,100 in August, but first-time buyers typically transact well below that figure, since they are competing for smaller, older or less updated properties that current owners, including retirees downsizing into smaller homes or senior communities, are the ones putting up for sale. A rising first-time buyer share is, from that angle, also a measure of how much of that entry-level inventory sellers on the other side of the transaction are releasing back into the market.
For an owner selling a starter-sized home to move into something smaller, the same report’s other numbers matter as much as the buyer-type breakdown: a 31-day median time on market and 4.9 months of supply mean a seller today is less likely to face multiple competing offers than in tighter markets, even as the buyer pool shifts toward first-timers who typically need financing contingencies a cash buyer would not.
NAR’s report ties the two-point rise in first-time buyer share to fewer cash and investor buyers competing for the same homes, not to a surge of new entry-level supply or falling prices, since the median price kept climbing through August. Whether that composition shift holds if mortgage rates move further from the 6.67 percent average Yun cited is the question NAR’s month-to-month data cannot yet answer.
A rising buyer share with no move-out cost accounted for
NAR’s 30 percent figure describes who is buying, not what it costs an owner to sell a starter home and move into something smaller, including the property taxes and utility bills that continue until closing.
The Senior Property Tax & Home-Cost Relief Kit lists the circuit-breaker credit that includes renters and keeps an application log and renewal calendar for tracking paperwork through a move.
Look up the renter-eligible circuit-breaker credit inside The Senior Property Tax & Home-Cost Relief Kit.
This article was researched and drafted with the assistance of AI and reviewed by The Money Overview editorial team.
