First-time homebuyers accounted for 28 percent of existing-home purchases in May-down from 34 percent a year prior, according to the National Association of Realtors.
Traditionally, first-timers account for four of 10 homebuyers, so their dwindling numbers are alarming some housing analysts and economists.
As home prices rise, first-time buyers may increasingly get left on the sidelines. Home prices have posted double-digit gains in the last year in many markets, and average mortgage rates are ticking up above 4 percent. Some buyers may have already missed the prime conditions to jump into home ownership.
"The people buying homes today are participating in home-price growth," said Lawrence Yun, chief economist for NAR. "Younger people are being left out. It remains to be seen when the first-time buyer can return."
First-timers are critical to the housing ladder because they help existing-homeowners sell and move up to larger or practical homes.
First-timers face competition from investors and tight credit conditions that are making it more difficult to qualify for a home loan.
The still looming aftereffects of the recession also represent a problem for some. The recession hit the 25- to 34-year-old age group hardest with high unemployment, coupled with the fact that this age group is also facing high levels of student loan debt-factors that have delayed home ownership for the younger generation.