The homeownership dream feels increasingly out of reach for many newcomers to the housing market, even as a surge of wealthy, cash-rich buyers snaps up properties. This stark division, painting a picture of a market split between two distinct groups, is the defining characteristic of real estate right now.

Housing Market 2025 Splits Between Wealthy Buyers and First-Timers

The National Association of REALTORS®’ (NAR) newly released 2025 Profile of Home Buyers and Sellers report lays bare these extremes, highlighting how affordability challenges are sidelining aspiring owners while those with substantial equity and cash reserves are calling the shots.

It’s a situation that feels personal to me, having spent years working in this industry. I see firsthand the frustration of young couples or individuals trying to save that elusive down payment, their hopes dashed by rising prices and interest rates.

Then, I see the seasoned buyers, often older and with significant equity from previous sales, swooping in with all-cash offers that are nearly impossible to compete with. This isn't just a statistic; it's a reality that's reshaping who can afford to own a home and for how long.

Key Takeaways from the NAR 2025 Profile of Home Buyers and Sellers

First-Time Buyers Facing Historically Low Numbers

One of the most alarming trends from the NAR report is the record low percentage of first-time buyers—a mere 21% of the market. Think about that for a moment: since NAR started tracking this back in 1981, we’ve never seen so few people entering the market for the first time. Before 2008, that number was hovering around 40%.

“The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory,” states Jessica Lautz, NAR’s deputy chief economist.

It's not just that fewer people are buying for the first time; those who are buying are older. The median age for a first-time buyer has climbed to a record 40 years old. Growing up, I always heard about people buying their first homes in their late twenties or early thirties. Now, that feels like ancient history.

Saving for a down payment is incredibly difficult with high rents and the persistent burden of student loan debt. Shannon McGahn, NAR’s executive vice president and chief advocacy officer, rightly points out, “For generations, access to homeownership has been the primary way Americans build wealth and the cornerstone of the American dream.” She adds that delaying this by a decade could mean missing out on approximately $150,000 in equity from a typical starter home.

Key Factors for First-Time Buyers:

• High rents making saving difficult.
• Significant student loan debt.
• Difficulty qualifying for mortgages.
• Intense competition from cash buyers.

While government-backed loans like FHA and VA, which often require lower or no down payments, have been vital for millions, their usage has decreased. The report shows FHA loan usage dropping significantly since 2009. NAR is advocating for policy changes to increase housing supply, streamline building regulations, and modernize construction to make homes more affordable. Without more homes at accessible price points, this generation of potential first-time buyers will continue to face an uphill battle.

The Rise of the All-Cash Buyer

On the flip side, we're witnessing an unprecedented surge in all-cash home purchases. Averaging 26% of all transactions over the past year, this is a huge jump from the less than 10% seen between 2003 and 2010. These buyers aren't just using equity from selling another home; they are often bypassing the mortgage process altogether. With interest rates being higher and lending conditions tight, an all-cash offer is incredibly powerful. It’s a sign of financial strength and a way to avoid the complexities and potential rejections that come with mortgage pre-approvals.

Down Payments Are Getting Bigger for Everyone

Regardless of whether you're a first-timer or a seasoned homeowner, the amount of money needed for a down payment is climbing. This is true for both groups, hitting levels not seen in decades. In 2025, the median down payment jumped to 19% for all buyers. For first-time buyers, it was 10%, and for repeat buyers, it was a hefty 23%. For first-time buyers, this is the highest median down payment since 1989, and for repeat buyers, it's the highest since 2003.

So, where is this money coming from?

• Personal Savings: Remain the top source for first-time buyers (59%).
• Financial Assets: Tapping into 401(k)s, IRAs, or stocks (26% for first-timers).
• Gifts/Loans from Family & Friends: A significant boost for 22% of first-timers.
• Equity from Previous Home Sale: The primary source for over half of repeat buyers (54%).

This directly ties back to the growing equity and wealth accumulated by long-term homeowners.

Why Real Estate Agents Are More Crucial Than Ever

Despite the rise of online tools, real estate agents remain essential. The NAR report shows that a staggering 88% of buyers worked with an agent, making them the most trusted source of information, outranking online listings. Buyers lean on agents for help finding the right home, negotiating terms, and navigating the mountain of paperwork. It’s particularly reassuring for first-time buyers, with 76% crediting their agent with helping them understand the complex process.

Sellers, too, are overwhelmingly relying on agents, with 91% using one. Their priorities are clear: getting help marketing their home effectively, pricing it competitively, and securing a sale within their desired timeframe. As Lautz says, “Real estate agents remain indispensable in today’s complex housing market.” They provide not just expertise and negotiation skills but also crucial emotional support during what is often the biggest financial decision someone makes.

I’ve seen it myself. An agent’s ability to spot potential issues in a home, their knowledge of the local market, and their skill at negotiating can make or break a deal, especially when you're up against tough competition.

FSBOs Hit an All-Time Low: A Sign of the Times

Following on the heels of the agent's importance, the report highlights that For Sale By Owner (FSBO) sales have hit an all-time low of just 5%. Homes sold with agent assistance fetched a median price of $425,000, significantly higher than the $360,000 for FSBO homes. While some owners might try to save on commission fees or sell to someone they know, the data suggests that the expertise and market reach of an agent lead to better outcomes.

Repeat Buyers: Exercising Their Financial Muscle

Repeat buyers are truly flexing their financial power. With a median down payment of 23% and nearly one in three paying all cash, they are in a strong position to compete. Years of rising home values have built substantial wealth for these homeowners. The average seller has now owned their home for a record 11 years, accumulating significant equity—an average of $140,900 gained in the last five years alone, according to NAR’s research. This allows them to make larger down payments, avoid financing contingencies, and often secure their next home with less stress than a first-time buyer.

Fewer Families with Children Entering the Market

A noticeable shift in the profile of home buyers is the decline in households with children under 18. This group now makes up just 24% of recent buyers, a stark contrast to 58% in 1985. This trend is likely a result of declining birth rates and the increasing age of repeat buyers. Additionally, the high cost of childcare presents yet another hurdle for families trying to save for a down payment.

This demographic shift also means there's a move away from the traditional family household. The share of married couples buying homes has also decreased, while single buyers, particularly single women, are gaining ground. This points to a more diverse range of individuals and household structures becoming homeowners.

The Aging of Home Buyers and Sellers

It's not just first-time buyers getting older; the entire cohort of buyers and sellers is aging. We’ve already seen the median age for first-time buyers hit 40, but repeat buyers are now a median age of 62, and the typical home seller is 64 years old—both record highs. This coincides with other NAR research indicating that Baby Boomers, now in their late 60s and 70s, are the largest group of both buyers and sellers. Their financial stability often allows them to navigate the market more easily than younger generations.

Buying for the “Forever Home” Mentality

The idea of a “starter home” seems to be fading. Home buyers today are planning to stay put for much longer. The median expected tenure in a purchased home is now 15 years, with many (28%) considering it their “forever home” and having no intention of moving. This is a dramatic shift from the early 2000s when homeowners typically stayed in their homes for just six years. The median time a homeowner has been in their current home before selling is now a record 11 years. This longer-term outlook applies to both first-time and repeat buyers, suggesting a desire for stability and a less transient approach to homeownership.

New Construction Sees a Slight Uptick

While existing homes still dominate sales, there's been a slight increase in new home purchases, reaching 16%—a level not seen since 2006. Builders have been offering incentives like price reductions and mortgage rate buydowns to attract buyers. Those opting for new construction often cite the desire to avoid renovations and repairs and the ability to customize their living space. On the other hand, buyers who prefer existing homes often point to perceived better value, lower prices, and the unique charm and character of older properties.

This polarization of the housing market is a complex issue with no easy answers. The gap between those who can afford to buy and those who are priced out is widening, creating significant challenges for economic mobility and the fulfillment of the American dream for a new generation.

You might think the big money folks are the ones buying up all the houses, but here in the trenches, it's the small investors like you and me who are really calling the shots in the housing market these days. Yes, you read that right. From the revitalized streets of Detroit to the sun-baked avenues of Las Vegas, everyday folks with a bit of extra cash are snapping up properties, shaping cities, and proving that you don't need a fortune to get in on the real estate game.

As a real estate enthusiast and someone who's seen this firsthand on the ground, I can tell you this trend is more than just a blip; it's a fundamental shift. The latest data from Realtor.com®'s Investor Report Midyear Update confirms it: small-scale landlords are outgunning the big corporations, especially in more affordable markets. This isn't just about buying a house; it's about smart investing, building wealth, and understanding where opportunities truly lie.

Small Investors Dominate the Housing Market From Detroit to Vegas

Why Small Investors Are Winning the Game

It’s easy to get caught up in the national headlines about housing prices and affordability becoming a distant dream. But what's really happening is a tale of two markets, as Realtor.com® points out. In pricey areas like California and Montana, you might see well-funded investors paying premiums, hoping for huge future gains. But that's not where the action is for most of us.

The real story, and where I see the most practical opportunities, is in places where prices are more down-to-earth. Think cities in the Midwest and other heartland states. Here, investors aren't just buying; they're often paying less than what a typical homebuyer would. This smart approach is paving the way for solid returns without breaking the bank.

Danielle Hale, chief economist at Realtor.com®, really nails it when she says, “Even as investors pull back from [COVID-19] pandemic-era activity, they’re facing fewer headwinds than many typical buyers.” That's a crucial point. With so many regular folks priced out or struggling with tight inventory, investors have a distinct advantage. They're often more flexible, and in certain areas, their activity is actually starting to influence prices in a positive way, making them more accessible.

The Bargain Hunters' Paradise: Where the Deals Are

Let's get down to brass tacks. Where are these savvy investors finding the best deals? According to the Realtor.com® report, Detroit is an investor's dream. The typical landlord there paid a jaw-dropping 58% less than an individual homebuyer. Imagine that discount!

Back in October, Detroit’s median list price was around $268,000, a full $156,000 below the national average. For perspective, that’s like getting over half your money back! This makes the “Motor City” not just an affordable place to live, but a goldmine for real estate investment.

Erica Collica Swink, an associate broker in Detroit, perfectly captures the vibe: “Home prices in Detroit are significantly more affordable when compared to other cities across the country, which is very attractive to investors.” She describes Detroit as being in a “transformation-recovery stage” with “a ton of opportunity.”

What makes Detroit so appealing? It’s this unique blend of affordability and ongoing development. This transitional period, as Erica calls it, creates what she terms “the perfect storm” for investors. They can scoop up properties that might need a little TLC, something individual buyers often can't tackle due to time or financial constraints. What’s great is that, in a sprawling city like Detroit (over 139 square miles!), this influx of investors isn't necessarily squeezing out local homebuyers. There's plenty of room for everyone.

Beyond Detroit: Affordable Havens in the Heartland

Detroit isn't alone. The Midwest is buzzing with investor activity. Cities like Pittsburgh, Baltimore, Cleveland, and Milwaukee are showing some of the biggest discounts for investor buyers.

• In Pittsburgh, investors were paying 52.7% less than the median home price, with typical investor buys landing around $115,000. That’s incredible compared to the metro’s overall median of $252,000. Pittsburgh's low median list price of $250,000 in October also made it stand out.
• Baltimore offered investors a 52% discount.
• Cleveland clocked in at 51.4%.
• And Milwaukee wasn’t far behind with a 50.1% discount.

Hannah Jones, a senior economic research analyst at Realtor.com®, explains this trend: “These discounts show that investors are targeting lower-priced homes and entry-level stock, which often provide the best rent-to-price ratios and long-term income potential.” This is the core of smart, small-scale investing: finding properties that offer steady rental income without astronomical upfront costs.

Small Investors vs. Big Corporations: A Shifting Tide

Looking at the broader picture, investors accounted for 10.8% of all home purchases in the second quarter, a slight increase year-over-year. But here's the kicker: it was the small investors who dominated. They captured their second-highest market share since 2007 at 62.7%, while larger players actually pulled back, seeing their buying activity drop to 20.1%.

What does this mean for you? It means the barriers to entry for real estate investing aren't as high as they used to be, especially if you're looking in the right places. The traditional wisdom of “big money wins” is getting a serious challenge.

Vegas Beckons: A Hot Spot for Savvy Investors

Now, let's talk about the glitz and glamour of Las Vegas. You might not immediately think of “bargains” when you picture Sin City, but the numbers tell a different story. Nevada, and Las Vegas in particular, has become a massive draw for investors.

According to Tania Jhayem, a real estate agent and investment specialist with Urban Nest in Las Vegas, the state's appeal is multifaceted:

• No State Income Tax: This is a huge plus for profitability.
• Low Property Taxes: Another way to keep more of your rental income.
• Landlord-Friendly Environment: Less red tape generally means an easier experience.

Tania notes that while the rental market is still strong, things are “normalizing.” This means more homes are available, properties are staying on the market a bit longer, and landlords might need to be more competitive with pricing to snag tenants. This is exactly the kind of environment where a smart investor can thrive.

The Realtor.com® report highlights that Nevada was one of the top states for investor purchases (15.4%), thanks to falling demand leading to more inventory and lower prices. Investors are keenly watching this shift. Tania has personally seen more investors this fall focusing on renting out properties for long-term stability rather than quick flips, taking advantage of price adjustments and motivated sellers.

Just like in Detroit, Tania believes that investor activity in Las Vegas has been a net positive. “It keeps the market moving, helps revitalize older properties, and adds much-needed rental inventory,” she explains.

What This Means for You

This shift in the housing market is a loud and clear signal. You don't need to be a Wall Street mogul to participate in real estate. Small investors are proving that with careful planning, research, and a focus on affordable, emerging markets, you can carve out your own piece of the American dream.

It’s about understanding where the opportunities are—often in cities that are undervalued but have strong fundamentals for rental demand. It's about seeing the “transformation-recovery” stages as chances to buy low and build wealth steadily.

The data is invaluable, but my own observation on the ground confirms this. I'm seeing more individuals, couples, and small groups pooling resources or diligently saving to make their first or second investment property purchase. They are focused on cash flow, appreciating assets, and long-term financial security.

So, if you've been thinking about investing in real estate but felt intimidated by the high prices in popular areas, take heart. Detroit, Pittsburgh, Baltimore, Cleveland, Milwaukee, and even cities like Las Vegas are demonstrating that the power is increasingly in the hands of the small investor. It's time to dive in, do your homework, and maybe join the ranks of those dominating the housing market, one smart purchase at a time.

Right now, the big question on everyone's mind is whether our housing market has unofficially dipped into recession. Treasury Secretary Scott Bessent certainly thinks so, suggesting that the Federal Reserve's cautious approach to lowering interest rates is partly to blame. He voiced this opinion on CNN's “State of the Union,” and it’s a sentiment that’s stirring up a lot of debate. I believe that while parts of the economy are definitely feeling the pinch, calling the entire housing market a full-blown recession might be jumping the gun, but the warning signs are certainly there. A lot of folks are feeling the squeeze, and the Fed’s policies are definitely playing a role.

Is the Housing Market in Recession in Because of Fed’s Decisions?

What’s Causing the Housing Market Headache?

Secretary Bessent pointed directly at high mortgage rates as the culprit hindering the housing market. He believes that if the Federal Reserve were to lower interest rates, it would directly bring down those daunting mortgage rates. This, in turn, could help lift us out of what he's calling a “housing recession.” He also made an important point: it's often the low-income consumers who are hit the hardest. These individuals tend to have more debt and fewer assets, making them more vulnerable when economic conditions tighten.

Now, it’s important to understand that the Fed doesn't directly set mortgage rates. What they do control is the federal funds rate, which is a short-term rate banks use to borrow from each other. Mortgage rates, on the other hand, tend to follow the yields of longer-term bonds. These bond yields are influenced by what investors expect the Fed to do in the future and the general state of financial conditions. So, while the Fed's actions are a major factor, it's a bit more indirect than simply flipping a switch.

Fed’s Latest Move and Mixed Signals

Recently, the Federal Open Market Committee (FOMC) decided to lower their benchmark interest rate by a quarter of a point, bringing it down to a range of 3.75%-4%. Following this news, the average rate for a 30-year fixed mortgage did dip to a low of 6.17%, the lowest it's been in over a year. This sounds like good news, right?

However, Fed Chair Jerome Powell quickly tempered any excitement about further cuts. He made it clear that another reduction in December is “not a foregone conclusion,” emphasizing that the Fed's policy isn't on a fixed, predetermined path. This caution is drawing criticism.

Under Fire: The Fed's Tightrope Walk

The Treasury Secretary isn’t the only one questioning the Fed's approach. Fed Governor Stephen Miran, who voted for a larger half-point rate cut at the last meeting, warned in an interview with The New York Times that keeping interest rates too high for too long could actually push the economy into a recession. He basically said, “Why run that risk if inflation isn't a major concern?” This is a valid point.

Bessent echoed this sentiment, arguing that with the Trump administration focusing on reducing government spending, inflation should naturally be coming down. His logic is simple: if inflation is dropping, the Fed should be cutting rates to stimulate the economy, especially for sectors like housing.

The Fed’s Balancing Act: Dual Mandate

It’s crucial to remember the Fed's job is a balancing act. They have a “dual mandate” from Congress: to promote maximum employment and keep inflation close to 2%. They raise interest rates to cool down an overheating economy and fight inflation, and they lower rates to encourage job growth and boost economic activity. It’s a tough job, and sometimes when they're trying to tame inflation, they inevitably slow down other parts of the economy.

Realtor.com® senior economist Joel Berner also chimed in, noting that while a Fed rate cut can help mortgage rates fall, it doesn't always mean a direct, one-to-one drop in those long-term home loans. He mentioned that there’s a lot of uncertainty in the economy right now, which adds to the difference between the Fed’s target rate and what homebuyers actually pay.

When Data Becomes Scarce: The Government Shutdown’s Impact

Adding another layer of complexity, the recent government shutdown meant the Fed had to make crucial policy decisions without access to important economic data, like September’s employment numbers. This lack of timely information makes their job even harder and can lead to decisions that feel disconnected from the real-time economic situation.

We did get some inflation data, though. The Consumer Price Index (CPI) increased by 3% in September compared to the previous year. This was the sixth straight month of rising annual inflation. While 3% isn't sky-high, the trend of increasing inflation over several months gives the Fed pause, even if some critics feel they should be more aggressive in cutting rates.

Is the Housing Market Really in Recession?

So, let’s get back to that million-dollar question: is the housing market already in a recession? Joel Berner, from Realtor.com®, wouldn't go as far as to definitively say “yes” yet. However, he agrees that the market is showing signs of distress and could be heading that way.

Here’s what he pointed out:

• Home sales are slumping: Sales are on track to be the slowest full year since 1995! And even with mortgage rates falling recently, the number of sales hasn't picked up enough to make a significant difference.
• Builders are pulling back: Homebuilders, who were busy constructing a lot of lower-priced homes after the pandemic, are now seeming to slow down their output.
• Demand is weak: Buyers are struggling with affordability, and at the same time, the supply of homes is decreasing. It’s a double whammy.

What’s the Real Engine of the Housing Market?

Ultimately, the health of the housing market is directly tied to the job market. Berner highlighted that the job market has indeed softened recently. Things like tariffs and a general slowdown in business cycles are leading companies to hire less and lay off more workers. When people don't feel secure in their jobs, they're naturally hesitant to make a huge commitment like buying a new home. This lack of confidence in employment is a major driver of the current slowdown.

My take on this is that the Fed is caught in a difficult spot. They're trying to fight inflation without causing too much damage to the broader economy. But with the housing market showing such clear signs of weakness – falling sales, cautious builders, and affordability issues – it does feel like we’re in a precarious situation.

The debate over whether we're officially in a recession might be semantics for many homeowners and aspiring buyers who are already feeling the pinch. The Fed’s caution, while perhaps well-intentioned, is certainly under fire because many believe it’s prolonging the pain for key sectors like housing. We need to see more concrete signs of economic recovery, and a stronger labor market, for the housing market to truly bounce back.

It’s been a pretty solid September for the housing market, and I'm feeling optimistic. The latest report from the National Association of REALTORS® (NAR) shows that existing-home sales jumped by 1.5% last month, hitting a seasonally adjusted annual rate of 4.06 million. This is exactly what we’ve been hoping for: as mortgage rates started to dip, more buyers felt comfortable making a move. So, yes, lower mortgage rates are indeed lifting home sales.

Housing Market Update: Home Sales Rise Fueled by Lower Mortgage Rates

This uptick is a welcome sign, especially after a period where affordability has been a major hurdle for many. For those of us who live and breathe real estate, seeing more transactions happen means a healthier market overall. It signals that buyers are back, and sellers are finding their homes moving faster. It's a complex dance, but right now, the music is playing a bit more cheerfully.

What's Driving This Positive Shift?

Honestly, it boils down to a few key factors, and the biggest one is definitely mortgage rates. In September, the average 30-year fixed-rate mortgage dipped to 6.35%, down from 6.59% in August. Even a small decrease like this can make a big difference in monthly payments, making homeownership feel achievable again for a lot of people. It's like finally seeing a clear path after a period of foggy uncertainty.

Dr. Lawrence Yun, NAR's Chief Economist, put it perfectly: “As anticipated, falling mortgage rates are lifting home sales. Improving housing affordability is also contributing to the increase in sales.” I couldn't agree more. When the cost of borrowing money for a home goes down, it directly impacts how much house people can afford. This affordability boost is a crucial piece of the puzzle.

Inventory Levels: A Mixed Bag, But Still Improving

One of the big concerns in recent years has been the lack of homes on the market. While we're not quite back to pre-pandemic levels, the inventory situation saw a slight improvement in September. Total housing inventory rose by 1.3% month-over-month to 1.55 million units. This gives us a supply of 4.6 months of unsold inventory.

This increase, while not massive, is significant. It means buyers have a bit more choice, and competition, while still present, might not be as cutthroat as it was. Dr. Yun also pointed out that inventory is matching a five-year high, which is encouraging. However, he also made a really insightful point: “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales.” This is important because it means the homes hitting the market are generally well-maintained and not part of a fire sale, which helps keep prices stable.

Home Prices: Still Climbing, But at a Slower Pace

Despite the increase in sales and inventory, home prices are still on the rise. The median existing-home price for all housing types reached $415,200 in September. This marks the 27th consecutive month of year-over-year price increases.

It's important to note that while prices are up, the rate of increase is more moderate than we've seen in some of the hotter periods. Personally, I see this as a good thing. When prices climb too quickly, it can price out a whole generation of buyers. A more steady, sustainable increase is healthier for the long-term market.

Breakdown by Housing Type and Region:

Let's dive a bit deeper into what's happening:

Single-Family Homes:

• Sales of single-family homes increased by 1.7% month-over-month to an annual rate of 3.69 million.
• Year-over-year, single-family home sales are up 4.5%.
• The median price for single-family homes climbed to $420,700, a 2.3% increase from the previous year.

Condominiums and Co-ops:

• For condos and co-ops, the sales picture was a bit different. There was no change month-over-month or year-over-year, with sales holding steady at 370,000 units annually.
• The median price for these properties saw a slight dip of 0.6% year-over-year, landing at $360,300. This could be due to a variety of factors, including buyer preferences or specific market conditions in cities where these types of homes are more prevalent.

Regional Trends:

The housing market is never a one-size-fits-all story, and the regional data for September really highlights this:

• The West saw a significant 5.5% surge in sales month-over-month, indicating strong demand in that region, even though year-over-year sales were flat. The median price here is the highest at $619,100.
• The South showed consistent growth with a 1.6% increase in sales month-over-month and a healthy 6.9% jump year-over-year.
• The Northeast also experienced positive growth, with a 2.1% rise in sales month-over-month and a 4.3% increase year-over-year, along with the second-highest median price at $500,300.
• The Midwest was the only region to see a slight decrease in sales month-over-month (-2.1%), but still managed to achieve a 2.2% year-over-year increase. Interestingly, it has the lowest median price at $320,800, making it potentially a more affordable option for many buyers.

Who's Buying and How Are They Doing It?

Some interesting insights come from the REALTORS® Confidence Index for September:

• Homes are taking a little longer to sell: The median time on market was 33 days, up from 31 days last month and 28 days a year ago. This isn't necessarily a bad thing; it could mean buyers are taking their time to find the right home and aren't feeling pressured by frantic bidding wars.
• First-time homebuyers are making a comeback: 30% of sales were to first-time homebuyers, which is up from 28% in July and 26% in September 2024. This is fantastic news for the future of homeownership.
• Cash is still king for some: 30% of transactions were cash sales, showing that some buyers have the financial flexibility to bypass mortgages entirely.
• Investors are stepping back a bit: 15% of transactions were by individual investors or second-home buyers, down from 21% last month. This suggests that perhaps individual buyers, with less investment capital, are re-entering the market now that rates have softened.
• Distressed sales remain very low: Only 2% of sales were distressed properties (foreclosures and short sales), which is a testament to the generally healthy financial state of homeowners and the market.

As a real estate professional, I see these numbers as a sign of a maturing market. We're moving away from the extreme frenzy and into a more balanced environment where both buyers and sellers can find success. The decrease in mortgage rates has unlocked a lot of pent-up demand, and it’s particularly encouraging to see more first-time buyers getting a foot in the door.

My Takeaway: A Path Towards Stability

The September housing market update paints a picture of progress. The return of slightly lower mortgage rates has clearly energized the market, leading to increased sales. While prices are still climbing, the pace seems more sustainable, and the growing inventory, though still needing more volume, offers buyers more choices.

For anyone looking to buy or sell, this is a crucial time to pay attention. The market is dynamic, and understanding these trends can give you a real advantage. I believe we're on a path towards greater stability, which is good for everyone involved. It’s about finding that sweet spot where affordability meets opportunity.

The housing market can feel like a constantly shifting puzzle, and understanding the current housing market trends is crucial whether you're dreaming of buying your first home, selling your place, or just curious about your neighborhood's value. Right now, nearly 29% of U.S. homebuyers are still opting to pay with cash, a figure that has remained remarkably steady compared to last year, suggesting a resilient segment of the market even as other factors begin to shift.

This might sound like a lot of cash, and honestly, it is. But digging a little deeper reveals a more nuanced picture. I've spent years immersed in the world of real estate, watching cycles ebb and flow, and I can tell you that while cash is still king for a significant portion of buyers, it's not the whole story. In fact, if you're someone who relies on a mortgage, there's actually some encouraging news brewing.

Housing Market Trends: Nearly 1 in 3 Buyers Still Opt for All-Cash Deals in 2025

Why is Cash Still So Prevalent?

Before I dive into the reasons, let me share a thought. For a long time, we saw a surge in cash purchases. This was largely because mortgage rates skyrocketed, making borrowing money incredibly expensive. When you can avoid those hefty monthly interest payments, especially on the kind of money buying a home takes, paying cash just makes sense if you have it. Redfin's data from October 2025 shows that the peak for all-cash offers was in late 2023 and early 2024 when mortgage rates were hovering in the high 7% range.

Think about it: if you have the funds, why wouldn't you skip the interest and potentially secure a deal faster in a competitive market? It's a strategic move for many. However, as mortgage rates have started to dip – currently averaging around 6.27% – the allure of paying cash has lessened for some. Lower rates mean lower borrowing costs, which can make taking out a mortgage more attractive again.

Furthermore, the market has become a bit less frantic. We saw a significant cooling from its “red hot” phase. When there are fewer bidding wars and less pressure to “win” at all costs, buyers who need mortgages don't feel as compelled to fork over cash just to beat out someone else.

The Rising Tide of Down Payments

While the share of all-cash buyers is holding steady, another significant trend is the record-breaking median down payment. In August 2025, the typical U.S. homebuyer put down a whopping $70,000. That's a 6.1% increase from the previous year. In percentage terms, the median down payment now sits at 18.6% of the purchase price, the highest it's been in August since 2013.

Why the jump? Well, home prices have been climbing, so naturally, you need to put down more money when the overall cost is higher. However, Redfin's analysis shows that down-payment growth has actually outpaced home-price growth. This tells me something interesting is happening.

One key reason, in my experience, is that affluent buyers are playing a bigger role in the market. When housing costs are high, those with substantial financial resources are more likely to enter the market and make larger down payments. They can absorb a higher price point and still make a significant down payment. It's also possible some wealthier individuals are choosing to make large down payments rather than paying cash as mortgage rates have eased slightly.

Beyond the wealthy, I'm seeing a trend with “move-up” buyers. These are homeowners who are selling their current property and leveraging the equity they've built up to put a substantial down payment on their next home. This strategy can significantly lower their mortgage amount and monthly payments. Also, lenders themselves might be encouraging larger down payments to mitigate their risk in a market that still has some uncertainties.

A Welcome Shift for First-Time Buyers

This rise in larger down payments, combined with slightly lower mortgage rates and a less competitive market, is actually a breath of fresh air for many first-time homebuyers. Kathy Scott, a Redfin Premier agent in Phoenix, shared something I hear often: “First-time buyers have more opportunities than they did when the market was hot; they’re no longer competing against 10 other offers from people who are either paying in cash or shelling out a 50% down payment.”

This means buyers who are stretching to afford a home can breathe a little easier. They're not necessarily facing instant rejection if they can't compete with all-cash offers or massive down payments. They can take their time, find a home that truly fits their needs, and potentially even negotiate on price. Kathy's advice is spot-on: “Now is a great time to start building equity if you’re planning to stay in your new home for five to 10 years.”

However, I need to acknowledge that not everyone has significant cash reserves. Andrew Vallejo, another Redfin Premier agent in Austin, TX, highlights the other side of the coin: “the people who are buying are those who are financially comfortable, secure in their jobs, and have money ready and waiting in the bank for a down payment.” He shared an example of a buyer who liquidated stocks to make a $400,000 down payment on an $800,000 home. That's certainly a different reality for many.

But even with this trend, the flip side is also true. For some first-time buyers with more modest savings, perhaps $10,000 or $15,000, finding a home with a small down payment used to be nearly impossible. Now, in some areas, with less competition, these buyers are finding that their smaller down payments are more feasible.

Where the Trends Play Out: Metro-Level Snapshot

It's important to remember that the housing market isn't a one-size-fits-all phenomenon. Trends can vary wildly from city to city. Here’s a quick glimpse from the August 2025 data covering 40 major metro areas:

All-Cash Purchases:

• Highest Prevalence: West Palm Beach, FL (43.4%), Cleveland, OH (42.1%), Miami, FL (39.2%). These areas often see a strong presence of investors and buyers with significant liquid assets.
• Lowest Prevalence: Oakland, CA (18.8%), San Jose, CA (19.1%), Seattle, WA (20.5%). These are typically high-cost-of-living areas where even buyers with strong finances might opt for mortgages to spread the cost.
• Biggest Increases in Share: Baltimore, MD; Riverside, CA; Providence, RI. This suggests a growing segment of cash buyers in these particular metros.
• Biggest Declines in Share: Milwaukee, WI; New York, NY; Cincinnati, OH. This implies a shift towards more mortgage-dependent buyers in these locations.

Down Payments (in Dollars):

• Largest: San Jose, CA ($408,000), San Francisco, CA ($400,000), Anaheim, CA ($300,000). These are some of the priciest housing markets in the nation, demonstrating the sheer scale of investment required.
• Smallest: Virginia Beach, VA ($9,000), Pittsburgh, PA ($23,000), Cleveland, OH ($27,000). These areas represent more affordable markets where a smaller down payment can go a long way.
• Biggest Increases: Providence, RI; Chicago, IL; Washington, D.C. Markets where demand is strong and home prices are rising could be seeing larger down payments.
• Biggest Declines: Riverside, CA; Seattle, WA; Denver, CO. This could indicate a cooling market in these areas, or perhaps a shift towards smaller homes or first-time buyers.

Down Payments (in Percentage):

• Highest: Anaheim, CA (25%), San Francisco, CA (25%), San Jose, CA (25%). Again, in very expensive areas, buyers often need to put down a larger percentage to make the numbers work.
• Lowest: Virginia Beach, VA (3%), Las Vegas, NV (9.4%), Tampa, FL (9.8%). These markets often have more lenient down payment requirements for certain loan types.
• Biggest Increases in Percentage: Providence, RI; Orlando, FL; Columbus, OH. This points to buyers actively trying to reduce their loan principal, perhaps due to higher interest rates or a desire for lower monthly payments.
• Biggest Declines in Percentage: Miami, FL; Denver, CO; Warren, MI. This reversal could suggest a relaxation of down payment requirements or a shift in buyer demographics.

My Take: Navigating the Current Climate

From where I stand, the current housing market trends present a fascinating duality. On one hand, the persistence of cash purchases shows a deep pool of financially secure buyers still actively participating. On the other, the slight easing of mortgage rates and a less cutthroat environment offer renewed hope and opportunity for those who rely on financing.

For potential buyers, my advice has always been to get pre-approved for a mortgage and understand your budget thoroughly. Don't get discouraged by headlines. Focus on your local market. Talk to an experienced real estate agent who understands the nuances of your area. They can offer invaluable insights and guide you through the process, whether you're bringing cash to the table or seeking a mortgage.

For sellers, understanding these trends is equally important. If you're in a market where cash offers are common and robust, you might be able to expect a quicker sale. If your market is seeing more mortgage-dependent buyers, presentation, price, and flexibility might be key to attracting offers.