Why First-Time Homebuyers Are Now 40

The way Americans buy homes has changed dramatically over the past few decades, with implications far beyond residential real estate.

For generations, the pattern was familiar: people bought their first home in their late 20s, traded up through middle age, and built wealth along the way. That pattern has broken down. According to the National Association of Realtors (NAR), the median age of first-time buyers has reached a record of 40, while their share of the market has fallen to a record-low 21%—about half its 2007 level. A market once shaped by demographics, mobility, and personal preference is now driven largely by one factor:

Affordability.

With 30-year mortgage rates still high and home prices near record levels, the income needed to buy a typical home has moved far beyond what most households earn. NAR estimates that buying at 40 instead of 30 costs a typical buyer about $150,000 in lost starter-home equity. That shift affects demand for everything from mortgages to building products.

To track the housing cycle, AMG uses an internal index to guide investment decisions across housing-exposed companies. Rather than relying on a single measure, it evaluates four areas: affordability, transaction activity, construction and supply, and homebuilder sentiment. It then weights each based on what matters most at the time. Right now, affordability carries the most weight because it is the market’s dominant force.

The index closely tracks the past 40 years of housing cycles. It bottomed in the early 1990s, climbed through the late 1990s to a mid-2000s peak, then plunged during the 2008 housing bust to one of its lowest points on record. It recovered gradually through the 2010s before peaking again in the post-pandemic boom, when low rates pushed demand far beyond supply. That peak did not last. As mortgage rates rose, the index fell just as quickly.

It has since settled into weak, below-average territory, consistent with what the affordability data show.

The direction matters more than any single reading. The index is designed to signal a true turn, not monthly noise, which usually means three or four straight months of movement in one direction. The most likely catalyst for a sustained upturn would be lower mortgage rates or policies that make lending and homebuilding easier. A shift like that would ripple through new construction, remodeling, building products, and the broader housing cycle.

Bottom line: Affordability remains the main constraint. Homeownership is shifting later in life, and the index is meant to show when that begins to change. With rates high and supply tight, that turning point could matter as much to portfolios as it does to would-be buyers.