First-Time Homebuyer Market – Genworth Mortgage Insurance released the inaugural First-Time Homebuyer Market Report last week. It is the only report to estimate the entire first-time homebuyer market (how many single-family homes are sold to first-time homebuyers), and is based on 20.1 million mortgage records of first-time homebuyers from government and industry reports between 1994 and the first quarter of 2017.
Q1 Trend – During Q1, home sales to first-time homebuyers continued to show strong momentum, increasing 11% from a year ago to 424,000 single-family homes. By comparison, the overall single-family housing market grew 7% from a year ago to 1.12 million units. As a result, 38% of homes were sold to first-time homebuyers, up 2 points from a year ago. The same trend can also be seen in the mortgage market, where 58% of purchase mortgages went to first-time homebuyers, also up 2 points from a year ago.
2015 – 2016 Trend – The strong growth in the first-time homebuyer market during Q1 is a continuation of the trend established in 2015 and 2016. More than half a million additional first-time homebuyers entered the housing market in those years, accounting for 85% of the increase in total home sales. In 2016, home sales to first-time buyers reached 2 million units – the highest level in 10 years. The rapid expansion in the first-time homebuyer market was the main reason for falling housing inventory and rising home prices during the past two years. But it will also eventually drive a supply response by homebuilders to build more “starter homes”. In the first four months of 2017, we are already seeing faster growth in new homes priced between $200 – $300 thousand.