Home sales may be slowing overall, but not among first time home buyers, according to a new report. In the first half of the year, first time buyers purchased 985,000 homes.
Genworth Mortgage Insurance culled all publicly available government and proprietary mortgage industry data to see how this segment of buyers is faring in the housing market. In the first half of the year, first-time buyers purchased 985,000 single-family homes, the most during the first six months of a year since 2005. In the second quarter, first-time home buyers purchased 572,000 single-family homes, up just 1 percent from a year ago. But it’s the six-month snapshot over this year so far that economists say is important to take note of.
“The market needs to put this quarter’s slowdown in first-time home buyer purchase growth in context,” says Tian Liu, Genworth’s chief economist. “Because while quarterly first-time home buyer purchase growth was nominal, on a semiannual basis this group recorded the most single-family home purchases since 2005. That is impressive considering overall home sales declined by 2 percent during the second quarter, with unusually slow activity in June.”
And yes, we did see a general market slow down. Despite favorable economic conditions, the housing market faces two challenges that contributed to the somewhat disappointing housing data for June. On the supply side, there is a lack of inventory in the existing homes market and no growth in new homes that are in high demand for first-time homebuyers. At the same time, a decrease in home sales may have been driven by an uptick in interest rates and home prices, which together raise the monthly mortgage payments.
Despite all of this, home buyers under the age of 35 have been increasing their home-ownership rates and “showing a determination and resiliency to become homeowners,” according to the report. The desire of millennials to become homeowners is also something we are seeing in our local Orange Count market. I have a lot of of buyers who are looking to buy their first home, but are struggling to choose from limited inventory.
First-time home buyers have a wide range of low down payment mortgage products available, which account for 79 percent of their home purchase transactions. According to the report, conventional loans with mortgage insurance have grown in popularity—in the latest quarter, for the first time, these loans have become the largest source of credit to first-time home buyers.
“It is remarkable that the first-time home buyer market has remained so resilient so far this year, reaching its highest level since 2005,” Liu notes in the report. “It shows the tremendous potential from this market segment.” Today, the first-time home buyer market is around 30 percent larger than in 2007, while total home sales are similar.
Article Source: REALTOR Magazine
The Study: First-Time Home Buyer Report
About Jaleesa Peluso, Laguna Beach Realtor & Certified International Property Specialist
Jaleesa and her team specialize in representing local as well as foreign buyers and sellers of Orange County real estate. Are you considering leasing, buying or selling your Orange County home? Call us now at (949)395-0960!