First-Time Buyers Take 30% Share as August Existing-Home Sales Fall Below 4 Million

First-time homebuyers captured a larger share of the U.S. housing market in August even as overall existing-home sales fell to their weakest pace in more than a year, suggesting newer buyers are finding selective opportunities as inventory expands and sellers lose some negotiating power.

First-time buyers accounted for 30% of existing-home sales in August, up from 29% in July and 28% in August 2025, according to the National Association of Realtors’ latest Realtors Confidence Index.

The gain came during an otherwise soft month for housing. Existing-home sales fell 2% from July to a seasonally adjusted annual rate of 3.98 million, the first reading below 4 million since June 2025. Sales were also 1.2% lower than a year earlier.

The combination is significant for mortgage lenders: transaction volume remains constrained by high borrowing costs, but first-time buyers are taking a somewhat larger portion of the business that is getting done.

More Inventory Is Giving Buyers Room to Negotiate

One factor working in buyers’ favor is a growing supply of homes.

There were 1.62 million existing homes available for sale at the end of August, up 3.2% from July and 5.9% from a year earlier. It was the first time inventory topped 1.6 million units since November 2019.

At the August sales pace, that represented 4.9 months of supply, up from 4.6 months in both July and August 2025. NAR said the August reading was the highest in more than a decade.

“The ample supply of homes for sale on the market is giving homebuyers better opportunities to negotiate,” NAR Chief Economist Lawrence Yun said.

Homes also took longer to sell. The median property spent 31 days on the market in August, compared with 29 days in July.

For first-time buyers, who often have less cash and housing equity than repeat purchasers, additional inventory and longer marketing times can matter. A market with fewer bidding wars and more motivated sellers can create opportunities to negotiate the purchase price, closing costs or other concessions, even when mortgage rates remain elevated.

Mortgage Rates Remain the Bigger Affordability Obstacle

The improvement in first-time-buyer share did not come with cheaper financing.

The average 30-year fixed mortgage rate was 6.67% in August, according to Freddie Mac data cited by NAR. That was up from 6.54% in July and 6.59% in August 2025.

Rates have since moved higher. Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed rate averaging 6.76% for the week ending Sept. 10, compared with 6.71% one week earlier and 6.35% a year ago.

Higher rates directly reduce purchasing power by increasing the monthly principal-and-interest payment required for the same loan balance. That pressure is particularly important for first-time buyers, who generally cannot use proceeds from the sale of another home to increase their down payment.

NAR attributed the broader August sales decline partly to borrowing costs.

“Mortgage rates and home sales move in opposite directions, so it's not surprising to see a mild dip in home buying activity due to high mortgage rates,” Yun said.

Affordability Improved Despite Higher Rates

Not every affordability indicator deteriorated, however.

NAR’s Housing Affordability Index rose to 104.7 in August from 101.2 a year earlier, with affordability improving year over year in all four major U.S. regions. NAR also pointed to 3.1% wage growth in August as a source of support for housing demand.

Meanwhile, home-price growth remained positive but relatively modest nationally.

The median existing-home price was $429,100 in August, up 1.6% from $422,400 a year earlier. That marked the 38th consecutive month of annual price growth.

The regional picture was mixed. Median prices rose 4.3% from a year earlier in the Northeast and 3.3% in the Midwest, while the South posted a 0.7% increase. The West recorded a 0.2% decline.

That divergence matters for first-time buyers because national averages can obscure substantially different affordability conditions from one market to another.

A 30% Share Is Progress, Not a Return to Normal

The increase to a 30% first-time-buyer share is encouraging, but it does not mean the longstanding barriers facing new buyers have disappeared.

NAR’s broader research has shown how far first-time buyers have fallen behind historical norms. Its 2025 Profile of Home Buyers and Sellers found that first-time purchasers represented just 21% of buyers during the survey period, the lowest share since NAR began tracking the figure in 1981. Before the Great Recession, first-time purchasers commonly represented about 40% of the primary-residence market.

The 21% annual figure and August’s 30% monthly figure come from different NAR surveys and cover different periods, so they should not be treated as directly interchangeable. But both point to the same broader conclusion: first-time buyers remain well below the market presence that was common before the financial crisis.

August therefore looks more like incremental improvement than a full first-time-buyer comeback.

Cash Buyers Still Hold an Advantage

First-time buyers also continue to compete with purchasers who do not need mortgage financing.

Cash transactions accounted for 27% of existing-home sales in August, up from 26% in July but down from 28% a year earlier. Individual investors and second-home buyers represented 15% of transactions, compared with 21% a year ago.

The decline in the investor and second-home share could be particularly relevant to first-time purchasers. Those groups can compete for some of the same lower-priced properties sought by entry-level buyers and may be able to make stronger cash offers.

A smaller investor presence, combined with more inventory, could be helping financed buyers compete even as rates remain restrictive.

What It Means for the Mortgage Market

For mortgage lenders and loan officers, August’s numbers reveal an unusual split in the market.

Overall transaction volume is weak. Existing-home sales are below a 4 million annual pace, mortgage rates remain near 7%, and prices are still rising nationally.

But beneath those headline numbers, the composition of buyers is shifting.

First-time buyers are taking a larger share of transactions, inventory is at its highest level since 2019, homes are spending more time on the market and investor participation is lower than it was a year ago.

Those conditions could create more opportunities for mortgage-dependent buyers who can qualify and comfortably afford the payment, particularly in markets where sellers are becoming more flexible.

The next major signal will come from NAR’s August Pending Home Sales Index, scheduled for Sept. 17. Because pending sales track signed contracts rather than completed closings, the report should provide a more forward-looking view of whether August’s increase in buyer leverage is translating into stronger purchase activity heading into the fall.