Genworth Mortgage Insurance reported [1] 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 [2] 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 [3]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.