First-time homebuyers are gaining share in the mortgage market having bought 36% of homes sold in the second quarter of 2018.
They accounted for 55% of purchase mortgages originated according to an analysis by Genworth Mortgage Insurance.
There were 572,000 single-family home sales in the quarter (up 1% year-over-year) with 454,000 home sales to first-time homebuyers financed by low down payment mortgages, the highest for a second quarter since this data series began.
189,000 conventional mortgages with private mortgage insurance were originated by first-time homebuyers. This was the first time that sales of conventional mortgages with private MI have outpaced other low-down payment options during a quarter.
"While quarterly first-time homebuyer purchase growth was nominal, on a semi-annual basis this group recorded the most single-family home purchases since 2005. That is impressive considering overall home sales declined by two percent during the second quarter, with unusually slow activity in June,” commented Tian Liu, Chief Economist, Genworth Mortgage Insurance.
He added that the decrease in home sales was driven by an increase in both interest rates (4.77%, up 0.47% year-over-year) and home prices that raised monthly mortgage payments for first-time homebuyers by 12.6% compared to the same period of 2017.
“Despite this, as well as a slowing in new home construction and a decrease in supply at every price point within the 'affordable home range' of $150,000 to $300,000, buyers under 35 years of age increased their homeownership rate, showing a determination and resiliency to become homeowners,” he said.
Liu concluded that Q2 2018 marked the first time that conventional mortgages with private mortgage was the largest source of credit to first-time homebuyers.