From Markets Insider:
The number of first-time homebuyers is plummeting. Why that’s bad news for the US economy.
Economists are always watching the housing market as a barometer for the health of the broader economy, and some see trouble ahead if first-time buyers can’t start climbing the real estate ladder.
The brutal US housing market has been particularly tough for younger people who typically make up a large portion of first-time buyers. Prices soared during the pandemic, and never came back down in most parts of the country. Mortgage rates, meanwhile, are the highest they’ve been in over 20 years.
A chart from Torsten Slok, chief economist of Apollo Global Management, showed in June that the number of first-time home buyers has fallen from 50% in 2010 to just 24% in 2024.
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The housing market is often seen as a bellwether for the economy. When it’s struggling, it can create ripple effects that negatively impact other areas.
“First-time buyers usually kick off the whole chain, and without them, it’s harder for current homeowners to move up or down,” Taylor Kovar, CEO of 11 Financial, told BI.
“That means fewer listings, slower construction, and less money moving through industries tied to homeownership like appliances, insurance, remodeling—you name it.”
These factors could impact the broader economy in the near-term. As Kovac noted, “Housing has always been a major engine in the economy, so when a whole generation steps back, that’s going to create some drag.”