There’s no doubt that 2025 was a tough year for first-time buyers. NAR data shows that first-time buyers made up just 21% of the market last year, an all-time low, and their average age rose to a new high of 40.
For many first-time buyers, saving for a down payment remains the biggest financial hurdle to homeownership. NAR data shows that current first-time buyers are offering a 10% discount, the highest amount in almost 40 years. While the most common source for these funds remains personal savings, NAR found that many are also tapping into other financial assets, including pension funds and stocks. Others have received financial help from family or friends through a gift or a loan. Additionally, Lautz noted that many first-time buyers are looking to improve their financial situation by doing things like living with family to save on rent or pooling resources to purchase a home with roommates and friends.
First-time buyers are looking at more financing options
The report added that many are also looking at more mortgage options, including adjustable rate mortgages, which typically offer lower initial interest rates before later resetting.
In Austin, says Shelley Jonietz, credit manager at Chase Home Loanstold NAR that her company has seen an increase in the number of first-time buyers choosing ARMs, but she cautioned that while ARMs can help with short-term affordability, they are not a long-term strategy.
“An ARM can make sense for many first-time homebuyers, especially those who expect to live in the home for only a short time,” she said. “It can give buyers the affordability boost needed to get into the housing market faster. Our role is to ensure they fully understand how this loan works, what future interest rate adjustments could look like and whether the structure fits their long-term plans.”
The report also noted that government-backed loans, which often require a low or even no down payment with some VA loans, remain good financing options for many first-time buyers.
In addition to these government loan programs, the report highlighted the variety of assistance programs available to people looking to bridge a financing gap. Lenders like Bank of AmericaAccording to the report, they offer first-time buyers a down payment subsidy of 3% of the purchase price, up to $10,000, as well as a homeownership subsidy of up to $7,500 that can be applied to closing costs or an interest buydown. At Chase, Jonietz said the company offers tools such as Homebuyer Assistance Finder and the Chase Homebuyer Grant, which offers borrowers up to $5,000 in eligible neighborhoods.
Homebuilders want to relieve stress
Homebuilders are also looking for ways to get more first-time buyers into the housing market. According to NAR, many builders are working to produce cheaper homes and offer incentives to buyers. By the end of 2025, roughly 40% of builders reduced prices for new homes, with an average reduction of about 5%, and roughly two-thirds of builders also offered other incentives, such as lowering mortgage rates.
In addition, data from the National Association of Home Builders shows that builders are ramping up construction of townhomes to the highest level in years, with townhomes representing 18% of single-family construction, an increase of eight percentage points from a decade ago.
But while all of these factors may play in their favor in 2026, NAR says it will be keeping a close eye on how many of those potential buyers will be purchasing a home for the first time.
“Interest rates have been falling lately… more inventory is coming onto the market… and slightly improved affordability conditions, even if only slightly, mean opportunities for first-time homebuyers,” Lautz said. “And I hope they can take advantage of that next year.”
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