From 2014 to 2017, the first-time homebuyer segment increased by approximately 40 percent and accounted for more than 80 percent of the total homebuyer market growth. And while the current wave of first-time homebuyers is facing challenges that include higher interest rates and a shrinking pool of affordable properties, their resilience in pursuit of homeownership is seen as an affirmation of new confidence in the housing market.
“This housing cycle has been called a first-time homebuyer-led cycle because growth in the first-time homebuyer market has accounted for virtually all of the growth in home sales and accounted for 65 percent of the growth in purchase loan originations,” said Tian Liu, Chief Economist at Genworth Mortgage Insurance and author of the new report. “The growing importance of first-time homebuyers in both housing and housing finance can be seen from two other measures. First-time homebuyers accounted for 39 percent of single-family home sales in 2018, up from 31 percent in 2014. It also was the highest level of first-time homebuyer mix since 2000. For mortgage lenders, first-time homebuyers are even more important. First-time homebuyers accounted for 56 percent of new purchase loans in 2018, up from 52 percent in 2014.”
Liu also noted that first-time homebuyers were not deterred by the decline in home sales during the fourth quarter of 2018.
“As a group, first-time homebuyers accounted for 56 percent of the loans used to purchase a single-family home and 39 percent of the sales,” he continued. “Compared to a year ago, first-time homebuyer market share is up by one percentage point in terms of sales, and up by 0.7 of a percentage point in terms of purchase loans.”