NAR data shows record share of first-time homebuyers pay all cash

Orlando, Florida. A new report from the National Association of Realtors indicates that the housing market is shifting in a way that excludes many younger buyers. While the overall share of first-time homebuyers has dropped to 22 percent, a near-record low, those who are purchasing are doing so with less reliance on traditional mortgages.

The data reveals a stark change in how these buyers fund their purchases. One in every ten first-time buyers paid the full price in cash, marking a record high since tracking began in 2003. This trend is driven largely by older buyers who have had more time to accumulate wealth or receive financial assets from family members.

Jessica Lautz, deputy chief economist at the NAR, noted that inheritances are a primary driver of this shift. Buyers who paid all cash were significantly more likely to use an inheritance or the proceeds from selling an inherited property than those who took out a loan. Specifically, 28 percent of all-cash buyers used an inheritance, while 21 percent used sale proceeds from an inherited property.

Age plays a central role in this financial capability. The median age for all first-time buyers remains at 40, which is also a record high. However, the median age diverges sharply based on funding method. Buyers who financed their purchase had a median age of 38, whereas those who paid in cash had a median age of 54. Lautz described this as a generational transfer of wealth that these buyers waited a long time to receive.

Beyond inheritances, personal savings remain the largest source of down payment funds. However, buyers are increasingly turning to investment assets such as 401(k)s, stocks, and cryptocurrency rather than asking family for help. Lautz suggested that older buyers find it more comfortable to use their own savings than to request a loan from parents at age 40, a dynamic that differs from the behavior of buyers in their early thirties.

Local and regional real estate agents report seeing this competition intensify. Jason Miller, a broker with Trust Real Estate Company in St. Cloud, Minnesota, said he saw virtually zero all-cash first-time buyers in the first 15 years of his career. Since the pandemic, he has handled a growing number of such transactions. Miller said buyers use cash offers to stand out in a competitive marketplace, especially when high mortgage rates make 30-year financing expensive.

Nate Johnson, a broker associate with RedKey Realty Leaders in St. Louis, noted that even in a slumping national market, local competition remains fierce. He observed that in multiple-offer situations, roughly three of ten bids might be all-cash. Johnson said some younger buyers borrow from relatives to make a cash bid, then refinance into a mortgage after closing to repay the family member.

The rise of cash buyers creates pressure on those relying on savings alone. Seth Daphne Esmeson, a 33-year-old resident of Seattle, described the frustration of trying to buy with student loans and car payments. They decided that current prices do not justify the cost of home maintenance and debt. Esmeson said the only way they might buy is if they received an inheritance, though they prefer not to strategize around that possibility while still renting.

The NAR report highlights a growing divide in the market. It contrasts those who are saving independently but priced out of homeownership with those waiting for a generational transfer of wealth. As boomers reach their 80s, the share of buyers using inheritances is expected to grow, further altering the dynamics of the housing market.