Buying a home is one of the biggest investments most people make, and the process may feel both exciting and overwhelming, especially for first-time buyers. There are many things to consider: does the property fit your financial and lifestyle needs? Should you buy an older property or a new one? What inspections or repairs would you require for old homes?
In addition to all these factors, you also need to consider aspects such as insurance, location and the future resale value of your property. In such a scenario, understanding what influences people's home-buying decisions can help you in your search for the ideal home.
Keep reading to know what is trending in the US housing market and make an informed choice.
Understanding the current homebuyer mindset
- What share of US home sales comes from new-construction homes? New construction represents about 15% of all home sales in the US. The majority of transactions come from existing homes, which make up more than 85% of residential sales.1
- Who are the most common first-time homebuyers today? The largest group of first-time homebuyers is younger millennials, accounting for 71%, while older millennials account for 29%.2
- What percentage of homebuyers finance their purchase? Around 74% of homebuyers financed their home purchase in 2025. This number is slightly lower than last year, when about 80% used financing.2
- Which regions in the US are seeing strong housing demand? Texas and several cities in the Midwest are experiencing strong housing demand driven by affordability and population growth. In the Northeast, many suburbs are attractive because they offer better value while remaining close to major job centers.3
What real estate trends should you know before buying or selling a home?
High mortgage rates are influencing buying decisions
Mortgage rates remain one of the most significant factors influencing the housing market. Even after slight declines, the 30-year fixed mortgage rates continue to remain around 6% to 7%, keeping monthly payments high and making it hard for many first-time buyers to get their first home.4
Homeowners who locked in historically low rates due to the economic impact of the COVID-19 pandemic are also reluctant to sell, further tightening the available housing stock. Buyers are opting for smaller homes, relocating to lower-cost regions or preferring older properties that fit their budgets.
Older homes are offering better value
The average US home is now more than 40 years old,5 primarily due to the slowdown in new construction following the 2008 financial crisis. Research suggests that buyers prefer older homes in established neighborhoods with access to schools, workplaces and public transit. Older homes also tend to offer lower upfront costs than newly built homes.
Older homes are often valued for their solid foundations, unique architecture and larger lot sizes. At the same time, high inflation has increased construction costs and slowed new developments, making existing homes appear to be a better value. Lower assessed property taxes and access to renovation loans add to the appeal.
People are moving to the suburbs
The rising cost of living is forcing people to seek value purchases away from major cities. Regions once overlooked — particularly in the southeast and some parts of the Northeast — are attracting buyers due to affordability, economic resilience and growing job markets. 6
Austin has seen a significant number of young professionals and tech workers moving in since 2020 for better employment opportunities. Other regions, including Texas, Kansas City, Missouri, Philadelphia, Omaha, Nebraska and Houston, also gained attention as they offer newer and more affordable homes compared to San Francisco, New York and Seattle.3
How does migration impact regional home prices?
Climate risk is shaping buying choices
Severe weather events are influencing buying patterns across the US. Hurricanes in Florida, wildfires in California and flooding in Louisiana, among other recent events, have made some areas more expensive to insure or more complicated to finance.
Homes in vulnerable areas are experiencing slower growth or even price declines, while areas considered safer are seeing rising demand. Lenders are also considering the impact of severe weather and are now checking for climate-related risks before approving a mortgage.
Younger people are investing in older properties
Millennials — born from 1981 through 1996 make up the largest share of active buyers and consider convenience to their job and commuting costs more important than other factors when deciding to buy a home. 2
As a result, they're willing to buy older homes if that means lower payments or access to a better job market.
On the other hand, younger boomers those born 1956 through 1964 — are more likely to invest in new construction, with 42% of buyers this year citing a desire to avoid renovation or electrical and plumbing problems. Their priorities lean toward comfort and lower maintenance rather than long-term property appreciation.
This generational divide is also visible in how people assess environmental features. Millennials prioritize commuting costs and energy efficiency, while older generations focus on convenience and durability, particularly in features such as new windows, high-quality insulation and reliable heating and cooling systems.
How are people using technology to buy and sell homes?
Technology, especially AI and data analytics, is transforming real estate from a human-driven, localized process into a more transparent, efficient and data-driven industry.
Buyers are using AI tools, virtual tours and data analytics to explore properties before even visiting in person. Digital mortgage tools enable them to get pre-approved and check affordability more quickly. Sellers use online platforms to list homes, schedule showings and receive offers. Real estate agents use digital transaction tools to manage documents, track communication and speed up closing.
Why is choosing the right home insurance important?
Home insurance is a critical factor in the home-buying process, as it directly affects a home's affordability, total cost of ownership and even financial ability due to rising repair costs, increased climate risks and stricter underwriting rules. It's importance is especially true for older properties that may need updates.
Looking at insurance early helps you understand the total cost of ownership and avoid surprises at closing. Gallagher's Personal Insurance advisors can compare quotes across multiple carriers, explain coverage differences and help you choose a policy that fits the home, your risk needs and your budget.
Home insurance FAQs
When should I get home insurance quotes during the buying process?
Start comparing insurance options as soon as you're seriously considering a property. Insurance costs can affect affordability and closing timelines. By shopping early, you may also qualify for an early shopper discount on your premium. It's always best to check in with your advisor for support throughout the process.
Are older homes more expensive to insure?
It depends on the home's condition, recent updates and location. Some older homes may need repairs before qualifying for standard coverage.
Does a standard home insurance policy cover everything?
No. Standard home policies typically exclude coverage for floods, earthquakes, landslides and damage resulting from neglect or poor maintenance. Coverage for these risks usually requires purchasing a separate policy — such as Flood insurance — or an endorsement.