The NATIONAL ASSOCIATION OF REALTORS® Profile of Home Buyers and Sellers is an annual survey of recent home buyers and sellers who purchased in the last year, from July 2019 to June 2020. This report allows industry professionals to gain insight into detailed buying and selling behavior. While every year is a unique time capsule where buyers and sellers purchase amid a changing economic environment, 2020 is especially distinctive as COVID-19 impacted Americans’ lives starting in March 2020.
Buying a primary residence for home buyers is a financial decision, but also an emotional decision that involves many lifestyle factors. For most home buyers, the purchase of a primary residence is one of the largest financial transactions they will make. Buyers purchase a home not only for the desire to own a home of their own, but also because of changes in jobs, family situations, and the need for a smaller or larger living area. The information provided supplies understanding, from the consumer level, of the trends that are transpiring. This survey covers information on demographics, housing characteristics, and the experience of consumers in the housing market. Buyers and sellers also provide valuable information on the role that real estate professionals play in home sales transactions.
This guide is based on the data from the year listed, the 2020 report is the latest version available.
The Profile of Home Buyers and Sellers report has been the leading industry source of trusted insight into consumer behavior for nearly four decades. It has grown and evolved to keep up with changing home buying trends and the need for more information. NAR first administered the survey in 1981 with just 59 questions. In 2020, the survey contained 131 questions. Although the report has evolved, data has been collected for more than three decades describing the demographic characteristics of home buyers and sellers, buyers and sellers’ experience in the home transaction process, as well as market characteristics including the use of real estate agents. One measure of how the market has changed is the manner in which the data is collected. In 1981, only a paper copy of the survey was offered. Today, recent home buyers can take the survey via paper or online, and in English or Spanish. Because of its long history and timely information available each year, the report is valued by REALTORS®, market analysts, and policymakers.
Data is collected from a nationally representative sample of recent home buyers who purchased a primary residence in the 12-month period between July and June. Data is also representative of the geographic distribution of home sales. Consumer names are obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records.
Given the unique data collection time period, this report continues to include eight chapters on buying and selling activity, but also includes two additional chapters. Chapter 9 separates buyers who closed on their transaction before April 2020 and those who closed on their transaction after April 2020. While buyers who may have established they intend to purchase before COVID-19, their search process and closing process may differ. Not every chart is reported in Chapter 9, only those which show unique differences in buyers and buyer behavior. Buyers who purchased during the onset of COVID-19 were more likely to have higher household incomes, purchase at a higher price point, and more likely to purchase a multi-generational home. Similarly, Chapter 10 focuses on the unique differences in sellers who closed in their home sale transaction before and after April 2020. While these sellers may have listed their home prior to the onset of COVID-19 in March, they closed on their transaction during a timeframe when many state and local areas had restrictions in place. Sellers who sold after April 2020 were more likely want to sell at least somewhat urgently, were more likely to sell in the suburbs, and need a larger home.
Among all buyers last year, the share of first-time home buyers continued to fall to 31 percent, from 33 percent the year before. This is the lowest share since 1987 when it was at 30 percent. While first-time buyers have had record low interest rates they have also faced a housing environment that has scarce inventory and rising home prices.
Tightened inventory is affecting the home search process of buyers. Due to suppressed inventory levels in many areas of the country, buyers are typically purchasing more expensive homes as prices increase. The number of weeks a buyer searched for a home fell to eight weeks from 10. Many buyers took advantage of new virtual tours and virtual listings and used those in their search process. Buyers continue to report
the most difficult task for them in the home buying process was just finding the right home to purchase.
For most home buyers, the purchase of real estate is one of the largest financial transactions they will make. Buyers purchase a home not only for the desire to own a home of their own, but also because of changes in jobs, family situations, and the need for a smaller or larger living area. This annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS® of recent home buyers.
This report examines:
- Characteristics of Home Buyers
- Characteristics of Homes Purchased
- The Home Search Process
- Home Buying and Real Estate Professionals
- Financing the Home Purchase
- Home Sellers and Their Selling Experience
- Home Selling and Real Estate Professionals
- For Sale by Owner (FSBO) Sellers
- Home Buyers Before and During COVID-19
- Home Sellers Before and During COVID-19
Characteristics of Home Buyers
- First-time buyers made up 31% of all home buyers, a dip from last year’s 33%.
- The typical buyer was 47 years old this year, and the median household income for 2019 rose again this year to $96,500.
- 12% of home buyers purchased a multi-generational home, to take care of aging parents, because of children over the age of 18 moving back home, and for cost-saving.
- 18% of recent home buyers were veterans and 2% were active-duty service members.
Characteristics of Homes Purchased
- Most recent buyers who purchased new homes were looking to avoid renovations and problems with plumbing or electricity at 44%. Buyers who purchased previously-owned homes were most often considering a better overall value at 35%.
- Home prices increased slightly this year to a median of $272,500 among all buyers. Buyers typically purchased their homes for 99% of the asking price.
- The typical home that was recently purchased was 1,900 square feet, had three bedrooms and two bathrooms, and was built in 1993.
- Heating and cooling costs were the most important environmental features for recent home buyers, with 83% ﬁnding these features at least somewhat important.
The Home Search Process
- For 43% of recent buyers, the ﬁrst step that they took in the home buying process was to look online at properties for sale, while 18% of buyers ﬁrst contacted a real estate agent.
- Buyers typically searched for eight weeks and looked at a median of 9 homes and viewed 5 of these homes only online.
- The share of home buyers who used the internet to search for a home increased to an all-time high of 97%.
- 64% of recent buyers were very satisfied with their recent home buying process.
Home Buying and Real Estate Professionals
- 88% of buyers recently purchased their home through a real estate agent or broker, and 6% purchased directly from a builder or builder’s agent.
- Having an agent to help them ﬁnd the right home was what buyers wanted most when choosing an agent at 51%.
- 73% of buyers interviewed only one real estate agent during their home search.
- 91% of buyers would use their agent again or recommend their agent to others.
Financing the Home Purchase
- 87% of recent buyers ﬁnanced their home purchase. Those who ﬁnanced their home purchase typically ﬁnanced 88%.
- First-time buyers who ﬁnanced their home typically ﬁnanced 93% of their home compared to repeat buyers at 84%.
- For 58% of buyers, the source of the downpayment came from their savings. 38% percent of buyers cited using the proceeds from the sale of a primary residence, which was the next most commonly reported way of securing a downpayment.
Home Sellers and Their Selling Experience
- For all sellers, the most commonly cited reason for selling their home was the desire to move closer to friends and family (15%), that it was too small (14%), and a change in family situation (12%).
- 89% of home sellers worked with a real estate agent to sell their home.
- For recently sold homes, the ﬁnal sales price was a median of 99% of the ﬁnal listing price.
- 46% of all sellers offered incentives to attract buyers.
Home Selling and Real Estate Professionals
- 77% of recent sellers contacted only one agent before ﬁnding the right agent they worked with to sell their home.
- 91% of sellers listed their homes on the Multiple Listing Service (MLS), which is the number one source for sellers to list their home.
- 77% of sellers reported that they provided the agent’s compensation.
For-Sale-by-Owner (FSBO) Sellers
- The median age for FSBO sellers is 57 years. 64% of FSBO sales were by married couples that have a median household income of $96,700.
- FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $217,900 last year (up from last year), and signiﬁcantly lower than the median of agent-assisted homes at $242,300.
- FSBO homes sold more quickly on the market than agent-assisted homes. 77% of FSBO homes sold in less than two weeks—often because homes were sold to someone the seller knows.
Home Buyers Before and During COVID-19
- Buyers who purchased after March were more likely to purchase a multi-generational home at 15% compared to 11% who purchased before April.
- Buyers who purchased after March have a shorter expected tenure in the home they purchased, just 10 years compared to those who purchased before the pandemic who expect to own their home for 15 years.
- 57% of buyers who purchased during the pandemic purchased in a suburban location, compared with 50% of pre-pandemic buyers.
- Buyers who purchased during the pandemic purchased a home that typically was $339,400 compared to pre-pandemic buyers who purchased a home that was $270,000. 23% of buyers who purchased after March purchased a home that was $500,000 or more.
Home Sellers Before and During COVID-19
- The top reason for sellers before April to sell their home was because they wanted to be closer to friends and family. Home sellers who sold their home after March were more likely to report the main reason for selling was because their home was too small.
- Home sellers who sold after March were more likely to say they were somewhat urgent in their need to sell their home – 46% compared to 39% of those who sold before April.
- Sellers who sold after March were more likely to use technology as a marketing tool. The biggest difference seen is among those using virtual tours. 27% used virtual tours after March compared to 16% of those pre-April.
- Home sellers who sold after March sold their home for $300,000 while those who sold before April sold it for $270,000.