First-time homebuyers are finding it increasingly difficult to purchase a home in Massachusetts as prices and low inventory have significantly increased competition in the market, according to the 2016 Massachusetts Profile of Home Buyers and Sellers from the National Association of Realtors (NAR).

The study found that the share of first-time homebuyers dropped to a low of 35 percent, which is the lowest it has been since the profile began collecting Massachusetts data in 2003. However, the state’s share of first-time buyers is on par with the national level for the year, which is also 35 percent.

“While 2016 was an overall strong year for the Massachusetts housing market, rising prices and plummeting inventory have significantly impacted the ability of many first-time buyers to purchase a home in the Bay State,” 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway, said in a statement. “The only way we can solve this problem is to produce the type of workforce housing many first-time homebuyers want and need, but can’t find.”

This is only the second time the percentage of first-time buyers has dipped below the 40 percent mark since NAR began recording the data. The state fared better than the South and West regions of the United States, but worse than the Northeast as a whole, which had a total share of 44 percent of first-timers in 2016.

Buyer/Seller Demographics

The median household income of Massachusetts buyers was up to $97,700 compared to $88,500 national median income. Fifty-eight percent of Bay State homebuyers were married couples, 18 percent single females, nine percent single males and 13 percent unmarried couples. Nationally, 66 percent of buyers were married, 17 percent were single females, 7 percent were single males and 8 percent were unmarried couples.

The median age of the first-time homebuyer in Massachusetts was 33, compared to 32 nationally. Fifty-four percent of first-time homebuyers in the state were between 25 and 34 years old, while 24 percent were 35-44 years and 10 percent were 18-24 year years. First-time homebuyers in Massachusetts had a median income of $82,100, compared to $72,000 among first-time homebuyers nationally.

The median age of a home seller was 45 years and they had a median income of $115,000 (the U.S. median was $100,700). The typical seller owned their home for 11 years. Eighteen percent of home sellers reported the main reason for deciding to sell was the home was too small. Another 18 percent cited the desire to move closer to friends and family, while 14 percent reported that the neighborhood had become less desirable. Three percent reported selling their house because they could not afford the mortgage and other expenses of owning a home.

Financing And Selling Prices

In 2016, 87 percent of buyers in Massachusetts financed their home purchase (97 percent of first-time buyers compared to 82 percent of repeat buyers). Savings continues to be the chief source of the down payment for 76 percent of buyers. Of those first-time homebuyers whose saving for a down payment or saving for a home purchase was delayed, 69 percent cited student loans compared to 55 percent nationally.

On the sellers front, in 2016, 58 percent of Massachusetts home sellers did not reduce their asking price before the home was sold. Only 26 percent of sellers offered incentives to attract buyers compared to 36 percent nationally. Most often that assistance was applied to closing costs, home warranty policies and credit toward remodeling or repairs.

When it comes to selling a home, sellers in Massachusetts worked with a real estate agent 87 percent of the time. Nationally, the rate was 89 percent for sellers. The survey also found that 18 percent of sellers in the Bay State had to delay the sale of their home because the value of their home was worth less than their mortgage. The national number was 11 percent.

The number of Massachusetts sellers who chose to sell their home without an agent or “For-Sale-By-Owner” (FSBO) was 10 percent and 7 percent (down from 8 percent) nationally. Of these, 46 percent of FSBO sellers nationally knew the buyer prior to the sale.