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First-time Homebuyers Flood the Market


home-in-your-handsThe number of first-time homebuyers entering the marketplace is on the rise, at least according to the First-Time Buyer Mortgage Share Index released earlier today.

According to the index, which comes from the American Enterprise Institute’s International Center on Housing Risk, first-time buyer volume has jumped 18 percent since April of last year, totaling 98,000 first-time buyer loans for the entire month.

The index also showed the first-time buyer share of home purchase loans has climbed upward as well. In fact, in April of this year, first-time buyers made up 58.8 percent of all primary owner-occupied home purchase loans with a government guarantee—up from 58.2 percent in 2014.

“April 2016 was another exceptionally strong month for first-time buyers, as both purchase loan share and volume hit series’ highs for the month of April” said Edward Pinto, co-director of the International Center on Housing Risk.  “The current housing market, particularly at the entry level, continues to exhibit strong, leverage-fueled demand. While bullish in the short-medium term, long term prospects point to a painful mean reversion down the road.”

The index also revealed which agencies had the most first-time buyer activity. In April, FHA issued the most first-time buyer activity, with more than 80 percent of its loans going toward that sector. RHS was close behind, while the VA, Fannie Mae and Freddie Mac closed out the bottom.

But it wasn’t just government-backed loans that saw more first-time homebuyers in April. The combined FBMSI, which uses both government-guaranteed and private-sector loan data, saw first-time buyers account for 52.9 percent of all loans. The year before, it was just 52.4 percent.

AEI experts believe April’s stats mean a strong market is on the horizon.

“First-time buyer activity was on a steep uptrend early this year,” said Stephen Oliner, co-director of the International Center on Housing Risk.  “This pattern bodes well for a robust spring homebuying season.”

About Author: Aly J. Yale

Aly J. Yale is a freelance writer and editor based in Fort Worth, Texas. She has worked for various newspapers, magazines, and publications across the nation, including The Dallas Morning News and Addison Magazine. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.

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