First American data show first-time buyers declining at roughly half the rate of repeat buyers
First-time buyer activity in the US housing market has pulled back in 2026, but the retreat is significantly shallower than that of repeat buyers, and smaller than widely cited statistics suggest. That's according to new analysis published by Odeta Kushi, deputy chief economist at First American Data & Analytics.
The findings arrive as the 30-year mortgage rate climbs toward its 2026 peak, keeping affordability under sustained pressure. Kushi's examination of agency purchase loan data offers a more layered picture of who is actually pulling back, and why.
US mortgage rates are inching closer to 7%. Freddie Mac reported the average 30-year fixed rate rose to 6.71%, its highest level in over a year, as Treasury yields climb amid inflation concerns and a global bond selloff.
— Mortgage Professional America Magazine (@MPAMagazineUS) September 3, 2026
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What the headline numbers miss
The most widely cited evidence of first-time buyer weakness comes from the National Association of Realtors' (NAR) 2025 Profile of Home Buyers and Sellers, which placed first-time buyers at just 21% of all buyers, the lowest share in the survey's history.
That measure captures both cash and financed transactions. Within the mortgage market, the picture looks different.
Using American Enterprise Institute (AEI) Housing Center data, Kushi found that first-time buyers accounted for 63.3% of agency purchase loans in May, nearly two-thirds of all financed purchase activity.
In volume terms, approximately 139,000 first-time buyer agency purchase loans closed that month, a 3.5% year-over-year decline. Repeat-buyer purchase loans totaled roughly 81,000, a steeper drop of 6.7%.
The gap persists over a longer horizon. Through the first five months of 2026, first-time buyer agency purchase loan volume fell just 0.3% compared with the same period in 2025, while repeat-buyer volume declined 2%.
ICE Mortgage Technology separately reported that first-time buyers represented more than half of all purchase loans closed in March, the highest share since June 2020.
That data point matters for mortgage professionals tracking first-time homebuyer trends in the current market. A rising share does not always mean a thriving segment, but the underlying loan counts confirm that volume, while down, has not collapsed.
The lock-in effect and what it means for brokers
The divergence between first-time and repeat buyer activity comes down to the rate lock-in effect. Many existing homeowners carry mortgages originated at 3 or 4%, and trading that rate for one in the mid-6% range, often on a more expensive home, makes staying put the more rational financial decision.
"Repeat buyers, however, face another obstacle: many must give up an existing low-rate mortgage in order to move. Trading a 3 or 4 percent mortgage for one in the mid-6 percent range, often on a more expensive home, can make staying put the more attractive financial choice," Kushi wrote in the report.
"First-time buyers have no low-rate mortgage to surrender, indeed their challenge is whether they can afford to enter the market at all.”
First-time buyers are embracing unconventional paths to homeownership, including gift funds, extended loan terms, and more modest entry-price targets. That makes early lender engagement critical, and a clear opportunity for brokers to differentiate.
Beyond the rate dynamic, Kushi's analysis points to a substantial pool of latent demand. First American research identified nearly 1.3 million "shadow homeowners" in 2025 — young adults living with family whose income, employment, and family status match those of future homeowners.
That cohort is reinforced by demographics: millennials remain in their prime home-buying years, with the oldest members of Generation Z now aging into the market.
First American's August 2026 Existing-Home Sales Outlook projects existing-home sales will edge up 0.07% compared with the previous month and 0.8% year over year, driven by a resilient economy and looser credit conditions.
For mortgage brokers focused on navigating first-time buyer affordability challenges, that points to demand that is constrained and delayed.
As the 30-year mortgage rate approaches its highest level of 2026, the question for brokers is not whether first-time buyers will return, but when conditions will give them enough room to act.
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