The market share of first-time homebuyers continued to decline this year, slipping one percentage point to 38 percent and down from the long-term average of 40 percent.  This is one of dozens of homebuyer characteristics included in the National Association of Realtors'® (NAR) 2013 Profile of Home Buyers and Seller released today.

The Profile is compiled from a survey conducted by NAR in July among home buyers and sellers who engaged in a real estate transaction between June 2012 and June 2013.  Surveys were mailed to a national sample of about 150,000 and generated 8,767 usable responses.  NAR said this was the latest in a series of NAR surveys on buyer/seller demographics, preferences, motivations and experiences dating back to 1981.  Results are representative of owner-occupants and do not include investors or vacation homes.

NAR chief economist Lawrence Yun said, "The share of first-time buyers appears to be only modestly below normal, but we have to keep in mind that investors have been more active in recent years, and they're not included in these results. Historically, first-time buyers are instrumental in housing recoveries because they help existing home owners sell and make a trade."

Sixty-six percent of buyers are married couples, 16 percent are single women, 9 percent single men and 7 percent unmarried couples.  In the 2010 survey 58 percent were married, 20 percent were single women, 12 percent single men and 7 percent unmarried couples.

The overall market share of single buyers declined from 32 percent in 2010 to 25 percent both this year and last.  In surveys conducted prior to 2010 the market share was stable, usually moving only one or two percentage points.

Yun said tight credit continues to affect homebuyers. "Single home buyers have been suppressed for the past three years by restrictive mortgage lending standards, which favor dual-income households who are more likely to have higher credit scores," he said. "Not seen in this survey is the elevated level of investors in recent years. The housing recovery would have been much weaker without investors, who often purchase with cash."

The median age of first-time buyers was 31, unchanged from 2012, and the median income was $67,400. The typical first-time buyer purchased a 1,670 square-foot home costing $170,000. The typical repeat buyer was 52 years old, earned $96,000 and purchased a median 2,060-square foot home costing $240,000.

Sixty percent of first-time buyers explained that their primary motivation was a desire to own their own home compared to 12 percent of repeat buyers giving that reason.  Sixteen percent of repeat buyers cited a desire for a larger home, 12 percent said they had moved for job related reasons.  The rest of repeat-buyer responses were in single digits. 

After hearing about the trend from its member NAR added a survey question about multigenerational families and found that 14 percent of households did include adult children, parents and/or grandparents.  Yun said this was another manifestation of the difficulty of obtaining a mortgage and of slow growth in good paying jobs

Nearly nine out of 10 buyers financed their purchase with average downpayments of 5 percent for first time buyers to 14 percent for repeat buyers.  First-time buyers used a variety of resources for their downpayment:  78 percent tapped into savings; 27 percent received a gift from a friend or relative, usually from their parents; and 7 percent received a loan from a relative or friend. Among entry-level buyers who said that saving for a downpayment was difficult, 54 percent said student loan expenses were a factor.

Ninety-five percent of entry-level buyers chose a fixed-rate mortgage, four out of 10 financed with a low-downpayment FHA mortgage, and 8 percent used the VA loan program with no downpayment requirements.

Buyers used a wide variety of resources in searching for a home. Over nine out of ten used the internet and 90 percent of those also used a real estate agents, typically after doing an internet search.  Other resources generating large responses were yard signs, open houses and mobile applications and search engines.  Buyers searched a median of 12 weeks and visited 10 homes.

While sellers had been in their previous home for a median of nine years, first-time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.

The typical home seller was 53 years old and their income was $97,500. Sellers moved a median distance of 18 miles and their home was on the market for 5 weeks, down from 11 weeks in the 2012 study. Forty-five percent moved to a larger home, 27 percent bought a comparably sized home and 29 percent downsized. Thirteen percent of sellers wanted to sell earlier but were stalled because their home had been worth less than their mortgage. 

The typical seller, who purchased a home nine years earlier, realized a median equity gain of $25,000, a 13 percent increase over the original purchase price, while sellers who were in their homes for 11 to 15 years saw a median gain of $52,000, or 28 percent.

For-sale-by-owner transactions accounted for 9 percent of sales, matching the record lows set in 2010 and 2012; the record high was 20 percent in 1987. The share of homes sold without professional representation has trended lower since last reaching a cyclical peak of 18 percent in 1997.

Eight out of 10 recent home buyers said their home is a good investment, and 44 percent believe it's better than stocks; 91 percent were satisfied with the buying process. "Interestingly, 6 percent of all buyers had previously sold a foreclosure or short sale, showing that sellers of distressed property are beginning to recover financially," Yun said.