Genworth Reports Strong First-Time Home Buyer Activity Amid Shift to Second-Timers

Genworth Mortgage Insurance, Richmond, Va., reported strong first-time home buyer activity in the fourth quarter, with single-family purchase activity up by 6 percent from a year ago.

The company’s quarterly First-Time Homebuyer Market Report (https://miblog.genworth.com/first-time-homebuyer-market-report/) noted 517,000 single-family homes purchased in the fourth quarter. First-time homebuyers grew to a 2.18 million seasonally-adjusted annual rate in Q4, the fastest pace since 2006

The report a stronger second half pushed the first-time homebuyer market to a strong full year result of 2.09 million. For the third consecutive year, the number of first-time homebuyers exceeded 2 million.

“The housing market is in the middle of a multi-year boom in the first-time homebuyer market said Genworth Chief Economist Tian Liu. “The market has exceeded 2 million first-time homebuyers each year for the past three years, which is unprecedented in the past 26 years. In part, this represents a long overdue rebound from the trough earlier in the decade.”

Other report findings:

–In 2019, 38 percent of all homebuyers and 56 percent of purchase borrowers are first-time homebuyers.

–The aging of the Millennial population implies the increase in first-time homebuyers over the age of 30 will likely lead to an overall increase in the number of first-time homebuyers in the 25-44 age group in the order of 580,000 first-time homebuyers over the next five years.

–The pool of potential second-time homebuyers increased for the first-time since 2008 to 8.3 million in 2019 and is projected to grow by more than three million over the next five years.

–States with fast job growth reported first-time homebuyer growth rates of 44 percent between 2014 and 2019, compared to the 37 percent growth rate for states with slow job growth

–In addition to lower mortgage rates, housing affordability also improved as homebuilders expanded building activity by 16 percent in the $200,000 to $400,000 price range, leading to the fastest growth in new homes sold since 2016

–Low-down payment mortgages financed 1.66 million (80 percent) first-time homebuyers in 2019, up one percent from 2018; Second biggest year for the low-down payment mortgage market in history.

–Nearly 720,000 first-time homebuyers used conventional mortgages with PMI to finance their first home purchase in 2019, up 5 percent from a year ago 

“The tremendous growth in the first-time homebuyer market over the past five years shows that first-time homebuyers have been busy building careers, and places with abundant job opportunities are very attractive to first-time homebuyers,” Liu said. “But the sheer size of the market and the delay in expanding housing supply means that a first-time homebuyer’s paradise, a place with abundant job opportunity and highly affordable housing, is difficult to find. Markets with abundant job opportunities and acute affordability challenges also are markets with the most opportunities to expand supply and policy intervention. In the meantime, first-time homebuyers may have to compromise between job opportunities and housing affordability.”