According to the National Association of Realtors® 2022 Home Buyer and Seller Profile, as home prices soar to previously unimaginable heights, fewer people are able to secure homeownership.

In fact, only about a quarter (26%) of all home sales were first-time buyers, the lowest percentage in the report's 41-year history. This is a significant decline from the previous year, when this group represented one-third (34%) of all homebuyers.

The report is based on a NAR survey of 4,854 buyers who will purchase a primary home between July 2021 and June 2022. Investment and vacation home purchases are not included in this report. Income data is from 2021.

"The decline in first-time homebuyers is now at an all-time low," said Jessica Rouse, vice president of research at NAR." This is not necessarily a surprise, as we know that first-time homebuyers are facing not only an affordability crisis - but a lack of homes available for sale, as well as external pressures, such as rising rental costs, that make it difficult to save for a down payment."

The housing market isn't just a challenge for first-time homebuyers. It can be daunting even for seasoned buyers dealing with a record shortage of homes for sale, fierce bidding wars and the pressure to forego critical contingencies in order to get sellers to consider offers. Rising inflation, rising rents and higher mortgage rates are also cutting into buyers' budgets.

As the COVID-19 pandemic dragged on and home prices continued to soar, homebuyers became eager to move farther away where they could get more house for less money. They moved 50 miles away from their former homes-compared to 15 miles in years past.

Many were able to expand their search because they were allowed to work remotely or commute to the office for part of the week.

"This finally gives people the freedom to move to a place where they can have more square footage and a bigger yard," Rouse said.

In addition, many people want to be closer to family and friends.

"It's certainly a factor that became more important to everyone during the pandemic," Rouse said.

The exodus to more rural areas is shown in the NAR report. Interest in urban living has waned, with only 10 percent of buyers closing in urban areas, down from 13 percent last year. Meanwhile, the popularity of small towns jumped from 20 percent of sales in 2021 to 29 percent in 2022. Rural communities rose from 12 percent to 19 percent.

The largest portion of sales (39%) remain in the suburbs. However, sales fell from 51 percent the previous year due to a lack of homes for sale and soaring prices.

First-time homebuyers who beat the odds and succeeded in purchasing a home are older than in years past, likely because they have more time to save or move further up the career ladder to higher-paying jobs. Their median age is 36, up from 33 last year.

Even so, many have difficulty coming up with a down payment, which for this group averages about 6 percent of the purchase price of a home. About 22 percent relied on monetary gifts or loans.

Nearly all first-time homebuyers (97%) need a mortgage to obtain homeownership. (First-time homebuyers are typically younger, cash-strapped, and do not yet have the equity available to purchase a new home that repeat buyers do.)

The homes they purchase tend to be smaller. The median size of their homes is 1,550 square feet, compared to 1,800 square feet for all buyers.

About 29 percent of buyers are single, 18 percent are unmarried couples and 5 percent are other family combinations, which may be friends or roommates pooling money to buy a property together.

"We know that first-time homebuyers have had to save for a longer period of time and struggle for a longer period of time to be able to purchase a home," Rouse said.

Regardless of their situation, buying a home is not an easy task for anyone.

Those who have been successful in buying a home in the past year tend to be older and in better financial shape than the average person. They also tend to be straight, white and married.

The median number of people who signed contracts last year was 53 years old, compared to 45 last year. Their household income was $88,000, 24 percent higher than the national median of $70,784, according to the U.S. Census Bureau.

Buyers' incomes are not as high as they were last year, in part because many retirees and part-time soon-to-be retirees are able to sell their homes for small amounts of money and then use the profits to buy property elsewhere.

"They have housing wealth, but not necessarily income," Rouse said." You may be able to buy with a lower income because you're making that open choice to move to that more affordable place."

More than half of buyers, 58 percent, have earned a bachelor's or advanced degree; 16 percent have an associate's degree; and 2 percent have not completed high school.

Nearly two-thirds of buyers, 61 percent, are married; 17 percent are single women; and 9 percent are single men.

Little progress appears to have been made in helping more people of color become homeowners. Minorities still make up only a small percentage of homebuyers, as discriminatory housing policies and banking practices that penalize low-income communities over the past few decades continue to discourage homeownership. Only 3% of all buyers are black, 2% are Asian and 8% are Hispanic. An overwhelming 88 percent are white.

"It has to do with housing affordability," Rouse said of the lower number of black and Asian buyers." Black renters pay a disproportionately high percentage of their income on rent, making it more difficult for them to save for a down payment. Asian homebuyers are more likely to purchase homes in the West, where affordability is most of an issue."

Only 2 percent of gays and lesbians and 2 percent of bisexuals (another group facing housing discrimination) have completed a home purchase. About 78 percent used a mortgage. While this sounds high, it is down from 87 percent the previous year.

Buyers typically searched the market for about 2.5 months before closing - about two weeks longer than typical.

Sellers were in a great position last year. There is a severe shortage of available properties, everyone seems to want to buy, and mortgage rates are hovering at historic lows. (Mortgage rates on 30-year fixed-rate loans are already over 7%.) This has caused prices to skyrocket, allowing them to call the shots.

Their top reasons for putting their homes up for sale are a desire to be closer to family and friends (21%), to move for retirement (11%), or for their neighborhood to become less desirable (11%).

The majority are also buyers. About 41% purchased a larger home, while 32% purchased the same size home.

Home sellers were older and more likely to stay in their homes longer. This may be due to concerns about contracting COVID-19.

They were in their 60s, compared to 56 the year before. They had lived in their house for about ten years prior to listing, compared to eight years in 2021. They were also overwhelmingly white, making up 95 percent of the properties listed.

"They received all of their asking prices and sold [their properties] within two weeks," Rouse said." They were generally happy with their home selling experience."

Buyers seem to want the same thing they wanted before the pandemic: detached single-family homes. The typical home purchased has three bedrooms and two bathrooms and is about 1,800 square feet in size.

That's about 100 square feet less than last year, but that may be due to those larger homes becoming less available in the price range buyers can afford.

About 79 percent of the sales were detached single-family homes, the embodiment of the American dream. About 8% of sales were mobile homes, 4% were cabins and cottages, 3% were townhouses, and 2% were duplexes, co-ops and condos.

Most people purchased existing homes that were generally more affordable, 88 percent, while only 12 percent purchased new construction homes that were typically more expensive. The typical home was built in 1986.

Buyers made compromises on homes because of affordability.