Genworth: First-Time Homebuyer Demand at Highest Level Since 2000
Mike Sorohan email@example.com
First-time homebuyers purchased 601,000 single-family homes in the third quarter, the highest level since September 2000, said Genworth Mortgage Insurance, Richmond, Va.
The company's quarterly First-Time Homebuyer Market Report said the jump in first-time homebuyers partially offset a slowdown in the overall housing market, as rising home prices suppressed demand from repeat homebuyers.
The report, drawn from a data set of 21 million first-time homebuyers over a 24-year span, said the 601,000 single-family home purchases by first-time homebuyers compared to 567,000 from a year ago, an increase of 6 percent. Genworth said first-time homebuyers accounted for 40 percent of all single-family homes sold and 56 percent of all purchase mortgages financed in the third quarter.
Genworth reported for the first time since 2011, repeat homebuyer demand declined, buying 5 percent homes during the quarter (888,000) compared a year ago.
Low down payment mortgages financed 467,000 sales to first-time homebuyers, which is the most loans in a quarter since the third quarter of 1999. Genworth said the private mortgage insurance industry insured 181,000 loans to first-time homebuyers during third, its highest level since the second quarter 2007 and a 19 percent increase from a year ago, representing the fastest-growing source of credit to first-time homebuyers in the mortgage industry. This compares to 197,000 FHA loans for the quarter, a 6 percent decrease from a year ago.
"The surge in first-time homebuyer demand, and the decline in overall purchases, was driven by supply-demand imbalances in today's housing market," said Genworth Chief Economist Tian Liu. "Supply shortages are making homes less affordable, reducing incentives to existing homeowners who want to upgrade. This was a leading cause of the 5 percent quarterly decline in repeat buyers, which contributed to the 1 percent decline in overall home sales. It shows that the housing market is not working for all homebuyers."
Liu said first-time homebuyer demand continues to increase "because of a greater sense of urgency from rental and home price inflation and greater housing need due to family formation. First-time homebuyers see more value in homeownership beyond a simple financial return on their investment. Increased supply of low down payment mortgage products has facilitated first-time homebuyers' entry into the purchase market."