In 2017, more than 2 million new or existing homes were purchased by first-time homebuyers, according to the First-Time Homebuyer Market Report from Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. The report, which measured data from the fourth quarter of 2017, revealed the number of homes purchased by first-time buyers increased nearly 7 percent from the same time in 2016, making last year the best for the first-time homebuyer market since 2006.
Still, purchase growth continues to be inhibited, as tight inventory brings elevated home prices. Since 2014, purchase growth has been on the decline, with 18 percent growth in 2015, 12 percent growth in 2016 and only 6 percent growth in 2017.
“The first-time homebuyer segment had one of its strongest years on record, and we expect it to continue growing in market share and driving the purchase market in 2018,” says Tian Liu, chief economist at Genworth Mortgage Insurance. “Since 2014, the segment has accounted for 82 percent of home purchases, but is still facing many headwinds.”
The supply of new affordable homes below $250,000 decreased 2 percent, driving down sales of such homes by 1,000 from 2016. As the supply constraint on affordable homes drives prices up, many first-time homebuyers are left on the sidelines.
“This supply shortage at the lower end of the price curve is driving home prices higher, which is sidelining many first-time homebuyers,” Liu says. “We expect the growth of new single-family homes to continue lagging demand.”