Younger buyers are delaying homeownership longer than prior generations, creating ripple effects that threaten market stability in growing mid-size cities.
In Conway, Arkansas, one of the state’s fastest-growing cities, first-time buyers once made up nearly half of all home sales. Over the past 18 months, that share has dropped sharply, according to Richard Henley, broker at ERA TEAM Real Estate, who calls the trend his biggest concern for local market health.
Henley notes that the decline is not unique to Conway. Across the U.S., entry-level buyers are stepping back from the market for both financial and behavioral reasons.
Why Home Prices Have Outpaced Wages for First-Time Buyers
The main factor is clear: home prices have risen much faster than wages for more than two decades, fundamentally changing the economics of first-time homeownership.
“Home prices over the last twenty-plus years have gone up higher and quicker than personal income,” Henley says.
As a result, buyers who would have qualified for starter homes 15 years ago now face much higher barriers. In Conway, entry-level homes are priced between $175,000 and $250,000, a range that remains active but serves a much smaller pool of buyers than it once did.
The affordability gap is not just a short-term effect of recent interest rate hikes. It reflects a long-term divide between what homes cost and what people earn. That divide makes it increasingly difficult for each new generation to enter homeownership.
The lock-in effect among current homeowners worsens the affordability problem. Homeowners who bought when mortgage rates were below three percent would face monthly payments roughly 50 percent higher if they sold and purchased again at today’s rates, even if home prices remained unchanged. The lock-in effect has led many move-up buyers to delay selling, keeping starter-home inventory low and further limiting options for first-time buyers.
Why Younger Buyers Are Delaying Homeownership Beyond Finances
Henley also sees a generational shift in attitudes toward homeownership.
“The current generation that should be buying first homes is just a little less motivated. They’re a little bit slower to move forward. It’s the same generation that has been more comfortable living with their parents longer,” he says.
The slower rebound in first-time buyer activity suggests that affordability is not the only issue. Even as the economy has improved and some buyers have more money available, the number of first-time buyers has not rebounded as expected. Many younger households are choosing to delay homeownership for reasons beyond their finances.
The delayed buying pattern aligns with broader demographic trends. People are forming households later, getting married later, and living with parents for longer periods. Whether this reflects a lasting change in preferences or a temporary response to economic uncertainty remains unclear.
How Fewer First-Time Buyers Are Slowing the Conway Housing Market
The absence of first-time buyers creates problems throughout the housing market. Without sufficient entry-level demand, move-up buyers struggle to sell their starter homes, which limits their ability to purchase larger properties. The shortage constrains inventory at all price points and slows overall sales activity.
In Conway, Henley reports that the share of listings that sell has dropped from 95 percent five years ago to about 70 percent today. While several factors contribute, the decline in first-time buyer activity is a primary driver.
The shift is also changing seller expectations. Many homeowners who grew used to quick sales and multiple offers during the recent boom are now seeing longer listing times and more expired listings. Homes that are overpriced or in poor condition are increasingly likely to sit unsold, a new reality that some sellers are struggling to accept.
How One Conway Broker Is Working to Bring First-Time Buyers Back
Henley and his team are trying to address the problem through targeted buyer education.
“My biggest concern is getting first-time buyers reinvigorated. We are doing everything we can to educate young people that buying a first home is the smartest financial move they will ever make,” he says.
Henley encourages buyers to view their first home as a long-term investment, keeping it as a rental property when they move up. He explains that this approach can generate strong returns, especially when buyers use low-down-payment owner-occupied financing.
It remains to be seen whether education alone can overcome the combined challenges of affordability and changing generational priorities. Henley is optimistic that first-time buyer activity will improve through 2026, but admits the market “is still not where we need to be.”
The longer first-time buyers stay out of the market, the harder it becomes to restore healthy market function. Without new buyers entering at the entry level, the housing market loses liquidity. The result is inefficiency in pricing, inventory, and transaction volume.
Looking ahead, the Conway market, and others like it, will depend on whether young buyers can overcome both financial and psychological barriers to ownership. If current trends persist, mid-size cities may face continued slowdowns and a less stable path for future growth.
