First time home buying surges after first-time home buyers purchased 601,000 single-family homes compared to 567,000 during 3Q’16, an increase of 6%, resulting in the highest quarterly purchase volume since September 30, 2000, according to the Genworth Mortgage Insurance First-Time Homebuyer Market Report for the third quarter of 2017. It was the highest level of first-time home buyer demand since the third quarter of 2000.
First-time home buyers accounted for 40% of all single-family homes sold and 56% of all purchase mortgages financed.
First Time Home Buying Surges and Repeat Buyers Decline
For the first time since 2011, repeat home buyer demand declined. This group bought 5% fewer homes during the quarter (888,000) compared to 3Q’16, this factor has been attributed to the first time home buying surges.
Low-down-payment mortgages financed 467,000 sales to first-time home buyers, which is the most loans in a quarter since the third quarter of 1999.
The private mortgage insurance industry insured 181,000 loans to first-time home buyers during 3Q’17, its highest level since the second quarter of 2007 and a 19% increase from 3Q’16. It represented the fastest-growing source of credit to first-time home buyers in the mortgage industry. This compares to 197,000 FHA loans for the quarter, a six percent decrease from 3Q’16. These are additional factors that have contributed to the first time home buying surges.
“While supply shortages continue to inflate home pricing, first-time home buyer 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,” said Tian Liu, chief economist at Genworth Mortgage Insurance. “First-time home buyers see more value in home ownership beyond a simple financial return on their investment.”
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