The Federal Reserve on Wednesday lowered interest rates for the first time in nine months, but potential home buyers are facing multiple obstacles that could keep the American dream of owning a home out of reach.
New data released Wednesday by the Census Bureau shows a decrease in privately-owned building permits, housing starts, and housing completions last month compared to August 2024.
“The typical cost of a home for both new homes and for existing homes is above $400,000 nationwide,” said Jessica Lautz, Deputy Chief Economist at the National Association of Realtors. “That being said, in some areas of the country, the median cost for an existing property actually tops $2 million.”
First time home buyers make up only 24% of all purchases, and they're getting older.
The median age for a first-time home buyer is now 38 —an all-time high — and a stark contrast to the 1980s, where first-time homeowners were typically in their 20s.
RELATED STORY | Federal Reserve lowers interest rates by 0.25% for the first time in 2025
“First time homebuyers have headwinds within the housing market, such as housing affordability and limited affordable housing inventory,” said Lautz. “But we also know that there's headwind outside of that housing market. So, saving for a down payment when you're paying higher rent and student loan debt and childcare costs make it very hard for a young adult to enter into homeownership.”
But there may be some relief on the way with the Federal Reserve lowering interest rates by a quarter of a percentage point, the first decrease since December 2024.
“That change in mortgage interest rates could help some home buyers into the market,” said Lautz. “If we look at the cost of the mortgage, it really does mean a difference of $140 per month for the typical price of a home. So that could be a game changer for some buyers.”
According to the Mortgage Bankers Association, applications to refinance home loans were 58% higher last week than the week before and 70% higher year over year.
