First-time homebuyers comprised 34% of existing home sales in February 2026, according to the National Association of Realtors (NAR), up from 31% in both January and the year-ago period. The improvement reflects eight consecutive months of increasing housing affordability, driven by wage growth outpacing home price appreciation and a modest increase in available inventory.
The NAR's Housing Affordability Index climbed to its highest level since March 2022, when mortgage rates were still in the 4% range. While rates are now at 6.11%, slower price growth (0.7% nationally) and wage gains of 3.8% year-over-year have combined to bring the monthly payment-to-income ratio back toward sustainable levels.
February First-Time Buyer Metrics
- First-time buyer share: 34% of existing home sales (up from 31%)
- Housing Affordability Index: highest since March 2022
- Median sale price: $395,000
- Average first-time buyer age: 36
- Average down payment: 9% (approximately $35,550)
- Mortgage rates: 6.11% (30-year fixed)
Why Affordability Is Improving
Slower Price Growth
National home prices rose just 0.7% year-over-year, the weakest appreciation since 2012. In many Sun Belt markets, prices are flat or declining. This deceleration means that first-time buyers are no longer chasing prices that rise faster than they can save.
Wage Growth Outpacing Inflation
Average hourly earnings grew 3.8% year-over-year in February. With home price growth at 0.7% and general inflation at 2.4%, real wages are increasing, improving purchasing power. For a household earning $75,000, a 3.8% raise adds $2,850 to annual income, enough to cover the higher carrying costs of a home at current rates.
Builder Incentives
New construction represents 33% of available homes, nearly triple the historical norm. Builders offer rate buydowns to the low 5% range, closing cost assistance of $5,000-$15,000, and upgrade packages. First-time buyers benefit disproportionately from these incentives because they lack the equity from a previous home sale that repeat buyers bring to transactions.
"The market is opening up for first-time buyers in a way we have not seen since before the pandemic," said Jessica Lautz, deputy chief economist and vice president of research at NAR. "More inventory, slower price growth, and builder incentives are creating real opportunities, especially in the Midwest and parts of the South."
Best Markets for First-Time Buyers
Affordability varies dramatically by geography. Indianapolis ($255,000 median), Kansas City ($240,000), Columbus ($285,000), and Pittsburgh ($210,000) offer median prices well below the national average with decent job markets. In these cities, a first-time buyer with a 5% down payment and a 6.11% mortgage pays $1,300-$1,650 per month, comparable to or below local rents.
Sun Belt markets that overshot during the pandemic boom offer deals as well. Austin has 7.8 months of inventory with falling prices. Phoenix has buyer-friendly conditions with sellers offering concessions. First-time buyers willing to look beyond the most competitive coastal markets will find the best value.
Steps for First-Time Buyers in 2026
Check your credit report at AnnualCreditReport.com and correct any errors. Aim for a score above 640 for conventional loans or 580 for FHA loans. Save for a down payment, but do not feel pressured to reach 20%. FHA loans require as little as 3.5%, and conventional loans start at 3-5% down. Get pre-approved by at least three lenders and compare rates, which can vary by 0.25-0.50% for identical profiles.
Explore first-time buyer assistance programs in your state. Many states offer down payment grants, reduced-rate mortgages, and closing cost assistance specifically for first-time purchasers. The National Council of State Housing Agencies (NCSHA) maintains a directory of programs at ncsha.org.
