The National Association of Realtors expects the affordability landscape to improve throughout the coming year, giving homebuyers more room to “make the math work” as inventory levels steadily climb. In a new report, the trade group pointed to the “unique ways” first-time buyers in particular are already making their homeownership dreams a reality.
“[First-time homebuyers] have strong demand for the American dream of homeownership, but they’re really just feeling left behind right now,” NAR Deputy Chief Economist Jessica Lautz said in a report on Tuesday. “Homeownership is a way that many Americans build wealth … and unfortunately, they’re just being pushed to the sidelines for a longer period of time and losing out on those wealth gains.”
“[But] they’re also thinking about unique ways to enter into homeownership,” she added.
Lautz said homebuyers, on average, are putting down 10 percent — the highest down payment level in 40 years. Although saving a 10 percent down payment is no small feat, it often pays off in the long run, reducing overall loan amounts and monthly costs. Most down payments, the report said, come from personal savings, but also include funds from 401(k)s, IRAs, or stocks, and financial gifts from family and friends.
In addition to offering larger down payments, the report said homebuyers are warming to adjustable-rate mortgages, which offer lower initial rates — a key to making monthly mortgage costs more affordable at the beginning of the loan.
However, Chase lending manager Shelley Jonietz told NAR that ARMs aren’t necessarily a long-term strategy, and should only be thought of as a way for homebuyers to get their feet in the door.
“Our role is to make sure they fully understand how this loan works, what future rate adjustments could look like, and whether the structure fits their long-term plans,” she said. “An ARM can make sense for many first-time homebuyers, especially those who expect to stay in the home for only a short time. It can give buyers the affordability boost needed to get into the housing market sooner.”
The report also highlighted down payment assistance programs and homebuilder incentives as important levers homebuyers can pull during their shopping journey.
The terms of downpayment assistance programs vary, but those offered by large-scale banks, like Bank of America, typically provide grants of 3 percent, up to $10,000. Homebuyers can also apply for a separate homeownership grant, which would push total assistance to $17,500.
“It’s incredibly important … to understand the process and to do your research for local government or municipalities’ ability to apply grants and down payment assistance, and talk to a lending professional,” Bank of America Head of Consumer Lending Matt Vernon told the Association.
Downpayment help alongside homebuilder incentives and price reductions, which average around 5 percent toward the end of the year, clear the playing field for homebuyers ready to start their homeownership journeys.
“That’s a way to kind of get particularly younger households into the dream of American homeownership,” Robert Dietz, chief economist at the National Association of Home Builders, told NAR. “Builders expect the townhome share to continue rising.”
Lautz said other market factors, like easing interest rates, create a sunnier picture for homebuyers in 2026.
“Interest rates have been coming down lately … more inventory is entering the market … and slightly improved affordability conditions, even if just slightly, does mean an opportunity for first-time homebuyers,” she said. “And I hope they are able to take advantage of that next year.”
