The Dow, S&P 500 and Nasdaq are reeling as Wall Street prepares for Election Day

Concerns about affordability are keeping more and more potential first-time home buyers out of the real estate market.

A new report showed that first-time home buyers made up 24% of all buyers this year, the lowest share since 1981, according to data from the 2024 National Association of Realtors (NAR) Profile of Home Buyers and Sellers.

High house prices, increased borrowing costs and low inventory levels have hit affordability over the past year, leaving many first-time buyers uncertain about purchasing a home. In July, the NAR surveyed more than 167,000 new homebuyers who said barriers to entry remained a challenge.

“During the period examined, mortgage rates rose to nearly 8% and housing affordability fell to historic lows. Homebuyers continued to struggle with housing inventory,” NAR Deputy Chief Economist Jessica Lautz told Yahoo Finance.

“At the same time, rental prices rose and after a student debt break, borrowers had to resume payments, making it difficult to save for a down payment,” Lautz added.

Mortgage rates have risen to between 6% and 7% this year – and now average mortgage rates are rising after hitting a two-year low in September. Meanwhile, entry-level buyers may also be bidding against those making cash offers.

“If a buyer had a solid financial foundation to enter the purchase market and there were multiple offers, there is a chance they were faced with an all-cash offer,” Lautz said.