Rising prices and competition from investors who pay cash are edging first-time buyers out of the U.S. housing recovery. First-time buyers accounted for more than 50% of sales in 2009, according to the National Association of Realtors. Such buyers accounted for 29% of home resales last month, compared with 32% in June 2012. Without the participation of first-time buyers, housing will be stuck in a "marginal recovery environment," says Steven Ricchiuto, chief economist of Mizuho Securities USA.

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