First-time home buyers have disappeared. Not good!

Hey Millennials, you know why you can't buy a house? Thank the Federal government. Every time these idiots spend more money than they collect the mountain of federal debt grows and interest rates must adjust as a result. Ergo high mortgage rates. By the way, Voldemort is on track to ramp up this debt just like Biden (despite the BS you're told about DOGE).

Back in the Obama days, mismanagement of the housing crisis put about 10 million contractors out of work, most left the industry. So another reason you can't buy a house: not enough skill folks to build them.

First-Time Home Buyers Are Struggling. That’s Bad News for Builders.

Even with construction companies offering cheap mortgages, youngish people are finding it difficult to enter the market

By Carol Ryan, WSJ

May 15, 2025 5:30 am ET

First-time buyers in the existing-home market are about 10 years older than historical norms. Photo: Nathan Howard/Bloomberg

Demand from first-time home buyers has hit record lows with mortgage rates stuck near 7%. One corner of the market shows it is worryingly weak even with rates at 5%.

Big home builders such as D.R. Horton DHI -3.40%decrease; red down pointing triangle and Lennar LEN -3.56%decrease; red down pointing triangle that have their own lending arms have been funneling part of the profits from high house prices into subsidizing loans. Buyers of newly built houses can get a mortgage rate of around 5% from a major builder, compared with the 6.79% average rate on a 30-year loan for the week through May 8.

The cut-price loans are meant to entice buyers and help builders shift finished stock. But the sweeteners aren’t working well this spring. Home builders’ sales were weaker than expected in their latest quarter. PulteGroup PHM -4.12%decrease; red down pointing triangle said new orders from first-time buyers dropped 11% in the first three months of 2025 compared with a year ago. Builders now have more completed but unsold homes on lots than at any time since 2009.

This is likely a sign that young, prospective homeowners are losing even more steam. The dysfunctional housing market has split first-time buyers into two camps: Those who are still able to get on the property ladder in the existing-home market, and those who can only afford to buy from a builder with the aid of a subsidized mortgage.

People buying their first homes in the existing market are about a decade older than historical norms, at 38 years of age, according to Jessica Lautz, deputy chief economist at the National Association of Realtors.

Their median household income has shot up to $97,000, and last year they had a 9% down payment on average. These buyers had to wait until they were older and had higher incomes for homeownership to be affordable. The share of first-time buyers in the existing-homes market is at a record low.

Home builders have increasingly been catering to younger and less wealthy first-time buyers. In 224, 40% of builders’ sales were to first-time buyers, data from the National Association of Home Builders show. That is 15 percentage points above the average share in the three years leading up to the pandemic.

New homes are a smart choice at the moment not only because of the mortgage-rate buydowns offered by home builders but also because the premium that buyers normally pay for a brand-new property has vanished.

The median-price new home currently costs 1% less than a median existing property, compared with a 17% premium historically, based on data from UBS housing analyst John Lovallo. Limited supply for existing homes has pushed their prices up, and newly built homes have been shrinking in size to keep them affordable.

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Some first-time buyers are putting themselves into a vulnerable financial position to own a home. The delinquency rate on FHA mortgages, which tend to attract first-time buyers because of the loans’ small down-payment requirements, hit 11% in the first quarter, data from the Mortgage Bankers Association show. Barring a short-lived spike during the pandemic, this is the highest level since 2013.

What is more, according to John Burns Research & Consulting, nearly 30% of all FHA mortgages being originated these days have a debt-service-to-income ratio exceeding 50%, meaning more than half of these buyers’ incomes is going toward servicing debt.

With first-time buyers increasingly tapped out, the builders that rely on them have a problem. Large listed builders are most exposed to the starter-home market, while smaller players tend to focus on the move-up or luxury part of the housing market.

D.R. Horton, America’s biggest home builder, said 63% of the loans closed by its mortgage arm in the company’s latest quarter were to first-time buyers. By comparison, a builder such as Toll Brothers TOL -3.92%decrease; red down pointing triangle does 70% of its business with wealthy move-up buyers or empty-nesters who have benefited from strong home-price appreciation and can use their equity to fund their next purchase.

The starter-home market should eventually benefit from the pent-up demand to buy among young people sick of renting. But until homeownership becomes affordable, builders have to offer ever-bigger incentives to get deals done.

Based on data from John Burns Research & Consulting, builders offered first-time buyers sweeteners and mortgage rate buydowns equivalent to 8% of the purchase price of a home over the first two weeks of April—up from 7.2% in January. This is chipping away at profit margins.

Hopes that demand will bounce back quickly after a small reduction in mortgage rates seem optimistic. For young buyers at least, home values likely also need to come down for them to be able to afford their own house.