Higher mortgage rates are forcing many first-time homebuyers to adopt a “wait-and-see” approach to the market. According to HomeLight‘s Top Agent Insights report released this week, real estate agents are feeling this and are being forced to switch up tactics to attract buyers.
HomeLight is an Arizona-based real estate platform designed to connect agents with clients. The company’s 2024 Top Agent Insights survey gathered perspectives from more than 750 real estate agents between Oct. 30 and Nov. 15.
More than half (59%) of agents reported a spike in contingency requests, according to the report. First-time homebuyers are struggling to achieve homeownership without extra help. Agents reported that 27% of first-timer buyers requested mortgage rate buydowns from sellers. HomeLight notes that this is becoming more common for existing-home sales.
According to the National Association of Realtors (NAR), only 24% of recent buyers were first-timers. By comparison, first-time buyers comprised 40% of the market before 2008. HomeLight also highlighted an increase in cash-only purchases as a factor that’s keeping first-time buyers away from the market, as they must compete with all-cash buyers and real estate investors.
Down payments were also an issue for first-time homebuyers, with 23% relying on gifts from family to cover these upfront costs. HomeLight said this is a sign that homeownership is increasingly hinging on generational wealth.
Recent business practice changes in the real estate market have also discouraged first-time buyers, according to the report. HomeLight found that the NAR commission lawsuit and the resulting settlement made buyers and sellers uncertain about how to handle changes to buyer-broker agreements.
“It has had unintended negative effects against the most vulnerable group of buyers: first-time buyers and lower-income buyers. Meanwhile, the luxury market is thriving and is unaffected, further widening the gap between classes,” according to a surveyed agent in Texas.
Other agents reported that the NAR settlement complicated things for buyers and sellers. One respondent said that “buyers are always short on money, and having to pay the agent’s commission can be difficult if a seller is not willing to pay their brokerage commission.”
Despite forecasts that predict mortgage rates above 6% in 2025, agents hope for a shift in the market. HomeLight reported that 45% of agents nationwide believe that interest rates will decline, bringing buyers back to the market.
This optimism is also reflected in expectations that cooling inflation and policy changes could improve market conditions. Agents believe that sidelined buyers will jump at the chance to seize home purchase opportunities under better conditions.
