Is 2026 a rebound year for first-time homebuyers?

As we head out of a high-rate, low-volume period, opportunities for first-time homebuyers (FTHBs) should increase in 2026. A prime opportunity for FTHBs will be in new construction and the surplus of inventory — especially as builders start to get squeezed on moving older, higher interest debt off their books, prompting them to offer buyer incentives like appliance packages and covering closing costs. Also, with the hurdle of high interest rates diminishing, the purchasing power of FTHBs should strengthen and get them back in the market.

Our chart above illustrates some interesting trends since 2004. In 2010, half of new home sales (50%) were to FTHBs, but that number was halved by 2024 (24%). The share of first-time homebuyers hovered between 35% and 40% from 2004 through 2024, and the median age of buyers entering their first home crept up since 2004, with a median age of 38, indicating “wait and see” attitudes as FTHBs ride out fluctuating economic conditions.

Some recent hurdles for first-time homebuyers have included price growth over the past few years and growing student loan debt. The 2025 Bank of America Homebuyer Insights Report (HBIR) suggested that prospective homebuyers were mostly holding out for falling home prices and mortgage rates. The report showed that the percentage of holdouts reached the highest level in three years, with 75% of those surveyed saying they were delaying a purchase for those reasons, compared to 67% in 2024 and 62% in 2023.^Footnote2 The HBIR concluded that slowing wage growth and tariff-related policies were also important factors.

Prospective buyers in the survey (made up of 1,000 homeowners and 1,000 renters) who decided to delay a purchase said they were holding out for three main developments:^Footnote2

• 63% said lower home prices
• 50% said lower interest rates
• 38% said increased savings balances or higher incomes

These holdout prospective homebuyers also identified the top three actions they were taking with the savings they had accumulated earmarked for a new home purchase:^Footnote2

• 52% said they were continuing to save
• 38% said they were paying off existing debts first
• 20% said they were investing in stocks and bonds

It’s well-known in the industry that the purchase of a new home is the largest purchase most people will make. That’s especially true for first-time homebuyers and a major reason for a long look before that leap. Price, obviously, is a major factor.

In fact, a late 2025 survey conducted by Tavern Research for the Searchlight Institute and reported on by Realtor.com® found that nearly all respondents said sticker shock was real. Only 3% of them said U.S. housing costs were “reasonable,” with 93% calling them “unreasonable.” Further, 15% said they were “a little too high,” 36% said “too high” and almost half — 43% — said they were “way too high.”^Footnote3

Of course, the survey comes at a time when the affordability-to-income ratio is at a 40-year low, coupled with a scarcity of inventory. Realtor.com® economic research found the United States needs nearly 4 million additional homes to meet demand.^Footnote3 A construction boom would increase supply and could help drive down prices.

In the Tavern Research survey mentioned above, 54% of respondents said they believed building more housing in their communities was crucial.^Footnote3 In August 2025, the sales of newly built homes were up 15.4% year-over-year, and the three-month moving average of new home sales increased from 656,000 in July 2025 to 713,000 in August 2025, according to the National Association of Home Builders.^Footnote4 Projecting the August numbers over the next 12 months suggested sales of 800,000 new homes. Freddie Mac data showed the average 30-year fixed mortgage rate of 6.26% in August 2025 was the lowest since early October 2024, signaling a positive outlook for 2026.^Footnote4

In October 2025, the Internal Revenue Service (IRS) announced the tax year 2026 annual inflation adjustments, including raising the standard deduction to $32,200 for married couples filing jointly, $16,100 for married individuals filing separately and $24,150 for heads of households.^Footnote5 This will bring bigger savings for taxpayers, especially in the low- and middle-tier brackets, freeing up more funds for FTHBs and boosting their chances of being able to afford a new home.

As we step into 2026, the housing market is beginning to shift in favor of first-time buyers. With mortgage rates trending downward and borrowing costs easing, more listings are becoming accessible — opening doors that were previously out of reach.

For many, this is more than a financial decision — it’s an emotional milestone. The journey to homeownership can feel overwhelming, especially in a market that’s still finding its balance. That’s where your expertise comes in.

Whether you're helping buyers navigate financing options or guiding them through their first offer, your role is pivotal. Your insight can turn uncertainty into confidence and make the experience not just successful, but memorable.

Let’s make 2026 the year we empower new homeowners — with clarity, compassion and smart strategy.