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First-Time Homebuyer Market Rebounds in Q3

Genworth Mortgage Insurance reported that first-time buyers purchased 591,000 homes in Q3 2019, which is a year-over-year increase of 1%. 

First-time buyers represented 39% of all buyers in the single-family market and 55% of purchase mortgages. Since 1994, first-time buyers represent an average of 35% of all buyers and 46% of new purchase borrowers. 

Homes sold to first-time buyers rose 9% from Q2 2019 to a seasonally adjusted rate of 2.14 million in Q3 2019. The reported 591,000 homes sold to first-time buyers was a large jump from the 401,000 during Q1 2019. 

Additionally, 32 states reported an increase in first-time buyers compared to 10 states in Q2 2019. 

CoreLogic recently reported that low mortgage rates and near-record unemployment numbers make it more enticing for first-time buyers, but the lack of supply could cause home prices to grow in 2020. 

CoreLogic is forecasting home price growth to outpace 2019’s 3.6%, with prices rising by an average of 4.8%. Also, CoreLogic says rising home prices will create more home-equity wealth in 2020 and overall delinquency and foreclosure rates are likely to remain at or below current levels. 

The latest CoreLogic Home Price Index said home prices rose 3.5% and are projected to increase by 5.4% over the next year. The increase in the October 2019 HPI gain, however, was down from October 2018’s rise of 5.2%. 

October 2019’s increase in the HPI was higher than September’s 3.3%. CoreLogic states home prices have been gradually rising year-over-year between 3.2% and 3.5% over the past six months.

Genworth’s report added that while the traditional 20% down payment is a hurdle for most first-time buyers, 80% of all first-time buyers (473,000)  during Q3 2019 used some form of low-down payment mortgage product. 

Just 117,000 first-time buyers put down more than 20% down payment. Genworth said 88% of purchase loans in 2018 with a 3-5% down payment went to first-time buyers—higher than the 53% who put 5-10% down and the 27% who more than 20% down. 

The use of conventional mortgages with low down payments, used by private mortgage insurance, have grown from 346,000 to 684,000 first-time buyers from 2014-2018.

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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