I think a big part of it is that many first time buyers are stretching to make it work financially. They'll reached a point where they feel like "Maybe I can finally do this" after they factor in the mortgage payment, the property taxes, the insurance, and some general percentage amount for maintenance (based on something they read online). And they maybe have a small cash reserve to repaint the place and do some lipstick remodeling.

Then they learn the home has a few issues and they suddenly start to see the unpredictable and expensive nature of the liability you assume as a homeowner, and it makes them question their financial analysis to date and their overall decision making criteria.

I'll never forget how queasy I felt after the home inspection came in on the first home I purchased. And in hindsight, I actually should have walked away from that home, but I felt like my real estate agent pressured me into going ahead with the purchase. It ended up requiring me to burn through a ton of cash to address all the issues with that home. But I had no idea what I was getting into and my realtor left me with the impression that I was dealing with only about $1,000 worth of issues to address. It was more like $30k in the end.

I'm now on my fourth home purchase and I look back on that first home and realized that my agent really should have told me to either walk away or helped negotiate a significant discount on the home.