Demographic Trends Reshaping the Market

We’re watching the share of first-time home buyers and the share of all-cash buyers, because that push-and-pull has really dominated the market. Another trend I watch closely is the growing share of single female buyers: We’re seeing single women really growing as a force in the market, and that reflects lower marriage rates and lower birth rates. There will continue to be people who buy homes, but it could be a different type of person than what we have seen historically. These demographic shifts are really shaping who is able to make moves in this housing market.”

• First-time buyers gradually re-emerge: “We know that interest rates have come down some, and we also know that there has been more supply entering the market in the existing-home sales space. With more inventory and slightly improved affordability conditions, that does mean an opportunity for first-time home buyers. I hope they are able to take advantage of that next year. We need them to come in so that we can see more movement in the housing market and healthy growth … because homeownership is a wealth-building tool.”
• Baby boomers remain the dominant force: “We are seeing that baby boomers are really the dominating force in today’s housing market. They have a ton of housing wealth, and they’re able to make trades right now—move close to the grandkids and move where they want to be. They’re not making many concessions on their home choices, and they have the funds to really make those choices. “If we continue to see this large share of retirees, we could continue to see smaller households and different housing choices than what we’ve seen historically. Just a quarter of buyers have kids. If we look at the demographics, we know that home size is shrinking and the number of people in the household is shrinking. With a larger share of retirees in the market, we’re seeing fewer buyers with young children.”
• All-cash buyers aren’t going away: “Mortgage applications have been trending up for a couple of months, so we are seeing more buyers enter the market who are not all-cash. That being said, I don’t think all-cash buyers are going away anytime soon, just because of the wealth that is in this housing market and the ability of homeowners to make trades without a mortgage.

From Jessica Lautz, NAR deputy chief economist