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Studying First-Time Homebuyers

For the first time, the annual growth rate in home sales to first-time buyers under performed the single-family housing market, as first-time buyers purchased 4% fewer homes in Q2 2019 than last year, according to Genworth. 

First-time home buyers purchased just 559,000 single-family homes during the quarter, which is lower than the overall single-family market that fell 2% year-over-year. Home sales to repeat buyers fell 1% annually. 

Sales to first-time buyers fell 3% from Q1 2019, and the report states that improved housing affordability has caused a “moderate rebound” since Q4 2018, with overall sales up 4%. 

There has not been a rebound for first-time buyers, as sales have declined 6% since Q4 2018. Also, 43 states reported slowdown of home sales from first-time buyers during the quarter, which is an increase from 39 states in Q1 2019. 

States that reported increases were: Maine (11%); Massachusetts (7%); Arkansas (6%); Rhode Island (5%); Connecticut (1%); and Ohio (1%). Wyoming and Pennsylvania reported no change in sales to first-time buyers. All other states reported decreases, with the highest being North Dakota’s 15%. 

“First-time homebuyers continue to represent a large part of the activities in the housing market. In Q2, they represented 36% of all buyers in the single-family housing market and 55% of new purchase borrowers,” the report states. 

Affordability struggles are apparent across the U.S, culminating in a slowdown of the housing market during Q4 2018, Genworth stated. That trend began to reverse in Q1 2019 as the slower rats in the housing market cooled home-price growth. 

Freddie Mac’s latest Primary Mortgage Market Survey revealed a 36-basis point drop in the 30-year fixed-rate mortgage. Interest rates for first-time buyers, however remained 50-basis points higher at 4.51%. Mortgage rates for first-time buyers have decline 39-basis points since Q1 2019.  

“The 50 basis point gap between these two measures of interest rate is largely the result of timing,” Genworth stated. “First-time homebuyers who locked in rates in Q2, but closed in Q3, will likely see lower rates and further reduction in monthly mortgage payments.”

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.

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