Here’s a funny thing about the housing market right now: the math is getting better for the typical buyer, but the typical first-time buyer is getting older and rarer. According to a report from Zillow Group Inc. (Z), a median-income U.S. household can now swing a home priced at $331,483. That’s a jump of $30,302 from a year earlier and the strongest affordability reading since March 2022. So, good news, right? Well, sort of. Because in the same breath, Zillow notes that the share of first-time buyers slid to just 21% in the 12 months through June 2025, and the typical first-time purchaser hit a record age of 40.
Think of it this way: the buying-power gain means median earners can shop from about 82,300 additional listings compared with last year. The affordable slice of for-sale homes rose to 40.3% of listings, up from 34.8% a year earlier, and inventory in January was 6% higher than the prior year. The shift is being driven by a mix of cheaper financing and slightly higher paychecks, with home-price appreciation cooling. Zillow said average mortgage rates moved down from 6.96% in January 2025 to 6.10% last month, helping push the typical principal-and-interest payment (excluding taxes and insurance, with 20% down) 8.4% below last year's level.
Why First-Time Buyers Are Still Left Behind
So if things are getting more affordable, why are first-timers still getting squeezed out? The data shows it clearly. Earlier, the National Association of Realtors reported that first-timers represented 21% of buyers in the year through June 2025, far below the long-run norm of 38% in records going back to 1981. Age is another signal that entry is getting harder, with the typical first-time buyer now 40, also a record. NAR deputy chief economist Jessica Lautz said, "The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory," and added, "Unfolding in the housing market is a tale of two cities," noting that repeat buyers with housing equity are better positioned while first-time buyers keep struggling.
Cash is also changing who wins bids. Over the past year, the share of homes bought entirely with cash climbed to an all-time high of 26%, further favoring older, equity-rich buyers who can move without relying on a mortgage. It’s a classic case of the haves and have-nots: if you already own a home, you can use your equity to buy another one with cash. If you don’t, you’re competing against those people with a mortgage, which is a much slower and less attractive offer to a seller.
The Surprising Affordability Rebound Explained
Affordability has improved, but the bar remains high: Zillow said a median-income household would still devote 32.3% of income to a typical mortgage payment. The firm pegged the recent trough in buying power at $272,224 in October 2023, when average mortgage rates were 7.62%, the highest monthly average since 2000. So we’ve come a long way from the worst of it, but it’s not exactly easy street.
Higher-cost metros posted some of the biggest dollar gains in what median earners can afford. Zillow said the San Jose metro saw nearly a $74,000 year-over-year jump in buying power, followed by San Francisco ($56,115), Washington, D.C. ($48,881), San Diego ($46,506) and Boston ($46,390). As Zillow noted, it expects mortgage rates to drift lower through 2026, which could expand budgets further and support a busier spring shopping season. The company also forecast existing-home sales rising 4% in 2026 versus 2025.
Age-Related Pricing Trends in Today's Market
This comes amid a buyer-friendly market where older sellers, specifically those over 70, are accepting about $20,270 less on average than their younger counterparts, as reported by the Center for Retirement Research at Boston College. With mortgage rates hovering around 6.3% and a significant 47% more sellers than buyers nationwide, these conditions are reshaping the dynamics of home sales.
The analysis highlights that sellers aged 80 and above receive roughly 5% less for homes they’ve held for about 11 years compared to those in their 40s and 50s, indicating how age and market conditions are influencing pricing strategies. This trend could further complicate the affordability challenges faced by first-time buyers as they navigate an increasingly competitive landscape.
How Cash Buyers Are Shaping The Market
Markets experiencing property value declines are witnessing a dual benefit, as reduced borrowing costs paired with decreased home prices enable households with typical earnings to access significantly more purchasing capacity, according to data compiled by Zillow.
The real estate analytics company identified Houston as the national leader in expanding accessible housing stock, reporting nearly 4,000 additional properties now affordable to typical earners compared to the previous year. Several other major metropolitan areas—Phoenix, Dallas, Miami, and Atlanta—have similarly broadened their affordable housing inventories, with each adding thousands of qualifying properties to their respective markets.
The tug-of-war between improving math for mortgage borrowers and the advantage held by cash-heavy buyers is still visible in broader benchmarks. Harvard University's Joint Center for Housing Studies put the median existing single-family home price at a record $412,500 in 2024, and its calculations suggest a buyer would need at least $126,700 in annual income to afford payments on a median-priced home using a 31% debt-to-income ratio. So even with the gains, the market is still a tough place for anyone trying to get in for the first time. The $30,302 boost in buying power is real, but it’s not enough to level the playing field when cash is king and first-timers are aging out of the game.
