Creative strategies help first-time buyers enter 2026 housing market

Will 2026 be a turning point for prospective first-time homebuyers? The National Association of Realtors (NAR) seems to think so. 

In a report published on Tuesday, the trade group says that it expects the housing affordability landscape to improve throughout the year. Driving this improvement, according to NAR, will be a steady rise in housing inventory and increased creativity by first-time buyers looking to “make the math work.”  

“They have strong demand for the American dream of homeownership, but they’re really just feeling left behind right now,” Jessica Lautz, the deputy chief economist at NAR, said of first-time buyers. “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. They’re also thinking about unique ways to enter into homeownership.”

There is no doubt that 2025 was a rough year for first-time buyers. NAR data shows that first-time buyers made up just 21% of the market last year, an all-time low, and their average age climbed to a new high of 40. 

For many first-time buyers, saving for a down payment remains the largest financial hurdle to homeownership. NAR data shows that today’s first-time buyers are putting 10% down, the highest amount in nearly 40 years. Although the most common source for these funds remains personal savings, NAR found that many are also tapping into other financial assets, including retirement funds and stocks. Others have received financial help from relatives or friends through a gift or a loan. Additionally, Lautz noted that many first-time buyers are looking to improve their financial situation by doing things like living with family to save on rent or pooling resources to buy a property with roommates and friends.

First-time buyers look to more financing options

The report added that many are also looking at more mortgage options, including adjustable-rate mortgages, which typically offer lower initial rates before later resetting. 

In Austin, Shelley Jonietz, a lending manager at Chase Home Lending, told NAR that her firm has seen an increase in first-time buyers choosing ARMs, but she warned that while ARMs can help with short-term affordability, they are not a long-term strategy.

“An ARM can make sense for many first-time homebuyers, especially those who expect to stay in the home for only a short time,” she said “It can give buyers the affordability boost needed to get into the housing market sooner. 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.”

The report also noted that government-backed loans, which often require a low or even no downpayment in the case of some VA loans, remain good financing options for many first-time buyers. 

In addition to these government lending programs, the report highlighted the variety of assistance programs available to those looking to bridge a financing gap. Lenders like Bank of America, according to the report, offer first-time buyers a down payment grant of 3% of the purchase price, up to $10,000, as well as a homeownership grant of up to $7,500 that can be applied toward closing costs or an interest-rate buydown. At Chase, Jonietz said the company offers tools like Homebuyer Assistance Finder and the Chase Homebuyer Grant, which provides borrowers with up to $5,000 in eligible neighborhoods. 

Homebuilders want to ease the stress

Homebuilders are also looking for ways to help get more first-time buyers into homes. According to NAR, many builders are working to produce lower cost homes and providing buyers with builder incentives. At the end of 2025, roughly 40% of builders cut prices on newly built homes, with the average reduction around 5%, and roughly two-thirds of builders also offered other incentives like mortgage rate buy-downs. 

Additionally, data from the National Association of Home Builders shows that builders are ramping up construction of townhomes to the highest level in years, with townhomes representing 18% of single-family construction up eight percentage points from 10 years prior. 

But while first-time buyers do have all of these factors playing in their favor in 2026, NAR said it will be keeping a close eye on how many of those prospective buyers turn into first-time homeowners. 

“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 home buyers,” Lautz said. “And I hope they are able to take advantage of that next year.”