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Economic Challenges Mean Today’s First-Time Homebuyers Are Fewer and Older

For generations, access to homeownership has been a way for Americans to build wealth. But over the last decade, U.S. first-time homebuyers have faced significant affordability challenges. Today, first-time homebuyers make only about 21% of home purchases, down from 24% in 2024 and 40% before 2008.^[1]  

At the same time, the median age of first-time homebuyers reached a record high of 40 years old. In addition to getting a later start, the modern first-time homebuyer often has less starting capital. The median downpayment for new buyers was 10%, compared to 23% with repeat buyers.^[2]

If you’re hoping to join the ranks of first-time homebuyer in 2026, or just curious about the current state of the housing and home insurance market, read on to learn:

• What’s happening with home prices in 2026
• The cost of home insurance in 2026
• What’s influencing today’s home shoppers

In 2026, Home Prices May Be (Slightly) More Affordable

The good news for new homebuyers is that housing affordability is expected to improve in 2026. Mortgage rates are forecasted to be 6.3% on average, down from 6.6% in 2024 and 2025. Meanwhile, home prices are expected to rise by 2.2%.^[3] Incomes are projected to grow at 3.5%, slightly outpacing  inflation, which will put house payments below 30% of income (a key marker of home affordability) for the first time in four years.^[4]

In Q4 of 2025, the median home sales price was $405,300, but with some regional variations.^[5] We expect the median home price to land around $414,216.

The Northeast has the most expensive new home prices at $799,000, and the South has the most affordable at $366,100. The median home sales price for FHA Insured Home Loans was $355,600. Because of the lower down payment requirement, FHA loans are often leveraged by first-time home buyers.

The Average Cost of Home Insurance Nears $3,000 a Year in 2026

There are a number of factors that will affect your monthly payment as a first-time home buyer, including the cost of the house, interest rates and home insurance. During the buying process, it can be easy to only focus on the first two, but home insurance shouldn’t be a forgotten line item.

There are a number of factors that affect what you pay for home insurance. The age and condition of your home, its price and its location – these all impact what you pay.

Florida Leads the Way in Home Insurance Costs

While the average cost of home insurance by state is currently a little under $3K, which state you live in makes a huge difference. After all, each region, state and even city faces unique environmental risk factors. 

• Florida has the most expensive home insurance premiums in the country with an average annual cost of $9,449. These costs are driven by hurricanes, high insurance fraud rates and the growing costs of operation in the area.^[5]
• In addition to Florida, Oklahoma, Mississippi, Louisiana and Nebraska have a cost exceeding $5,000 a year for home insurance, primarily driven by the threat of wind and hail. 
• Vermont currently has the least expensive average home insurance costs at $1,087 a year.

Note: Hawaii’s average of $732 is actually lower but doesn’t include the cost of hurricane insurance which is often mandatory.

Newer Homes Cost Less to Insure, but Not for Long

The age of your home also has a bearing on what you will pay. Newer homes tend to be the least expensive to insure. Insurance prices increase sharply for homes more than 5 years old, and then very gradually for homes older than that. Homebuyers of newer homes should be prepared to absorb rising costs of insurance as their homes age.

First-time homebuyers are more likely to buy newer homes, and thus take advantage of lower premiums for the first few years. According to a national survey conducted by The Zebra, 40% of first-time home buyers bought a home built in 2020 or later, compared with only 8% of other homeowners who own similar aged homes.

Home Insurance Will Likely Increase in 2026

Home insurance rates are likely to go up in 2026. In many areas, rates in 2026 are expected to rise less than 10%. However, in locations with recent disaster claims, that number may grow more steeply.^[7]

David Seider, chief commercial officer of The Zebra, offered his predictions as an experienced insurance leader on some of the reasons why. 

"Americans are facing rising insurance costs due to various factors, including economic pressures like higher labor rates, increased costs of building materials, and severe weather risk,” explains Seider.

“While competition and discounts give consumers opportunities to save, most renewals will remain high. If the economy weakens, insurance could take a growing bite out of take-home pay, prompting more frequent shopping for better deals – or even causing some to forego coverage altogether."

In light of growing environmental threats and economic instability, our survey data indicated that 83% of new homebuyers are considering adding additional coverage to their policy in the coming year. When asked what factors influenced them to consider carrying elective or supplemental coverage, 65% cited wanting increased peace of mind.

Affordability Is the Top Concern for First-Time Homebuyers

The homebuying process is often one of compromise. In order to find a home within your budget, you might have to sacrifice square footage or certain features or your preferred neighborhood. 

We surveyed first-time homebuyers who purchased in the last year on their top priorities when buying a home. Potential affordability was cited as a priority by nearly half (46%).

First-Time Homeowners Are More Confident and Knowledgeable About Their Home Insurance Choices

Homeowners insurance can be difficult to navigate. Despite the learning curve, the process of securing insurance appears to make first-time homebuyers more confident insurance consumers. 

According to our survey, 85% of first-time buyers believed they had enough clear information to confidently choose a home policy and that their policy provides the coverage they need.

Additionally, they might be more dialed into what their policies contain. 

• 87% of respondents who bought homes for the first time last year reported understanding the details of their current homeowners policy compared to 80% of other homebuyers. 
• 55% of our respondents also said they read their policy thoroughly compared to only 22% of their other homeowning peers. 
• Additionally, only 6% of new homebuyers didn’t know their deductible, compared to 19% of other homeowners.

Despite their general confidence in insurance shopping and understanding their policies, there are some aspects of home insurance policies that are more confusing for new homeowners.

For example, first-time home buyers are twice as likely than other homeowners to say that understanding their deductible is the most difficult part of deciphering their insurance policies. Meanwhile, existing homeowners seem to find it more straightforward, suggesting that as homeowners use their policies over time, they get more comfortable with how they work.

Tips for Getting the Right Home Insurance Coverage

If you’re joining the ranks of homeowner for the first time this year, it can be a confusing and financially fraught process. However, finding the right home insurance coverage doesn’t have to be. Here are some tips to make sure you’re getting and maintaining the right coverage for your home.

Tips for Saving on Homeowners Insurance as a First-Time Homeowner

Unsurprisingly, new homeowners also have a preference for shopping online. They are more likely to shop with insurance companies directly or to use online comparison websites to get their quotes.

Shopping online can be a good way to compare multiple quotes to quickly find the right coverages. In addition to getting the right coverage, you don’t want to pay more than you need to. Here are some tips for saving.

Nobody Does Insurance Like The Zebra ®

Since The Zebra’s first State of Insurance^TM report in 2016, car insurance prices have risen by about 74.6%. Back in 2016, Beyoncé was making Lemonade and we were still strangers to a brand-new show called Stranger Things. How things have changed since then! 

Our unique analysis can’t be found anywhere else because no one else has access to both market data and the proprietary data we've gathered from years in the business. When it comes to the State of Insurance^TM, the trends we predict come not only from measured reports, but also from what we’ve seen from helping over 74 million people with their insurance since 2012.

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