While housing analysts and industry groups continue to point to an absence of first-time homebuyers as a major headwind to the market, a newly released indicator suggests the actual share of entry buyers in the last year may be much higher.
According to a new index released Wednesday by the American Enterprise Institute's (AEI) International Center on Housing Risk, an estimated 46 percent of mortgages made from October 2013 through October 2014 were for first-time homebuyers. Looking only at government-guaranteed loans, that share is closer to 52 percent.
The figures compare to much lower estimates from the National Association of Realtors, which reported last month that only about one-third of home purchases were made by first-time buyers, a nearly 30-year low.
Edward Pinto, co-director and chief risk officer for the Center on Housing Risk, said that the center's first-time buyer indices are based on a larger and more complete dataset, cutting out room for error.
"Discussions about homeownership and credit availability are hampered when not grounded in good measurements of loan availability and risk," Pinto said. "We developed these new tools to provide accurate information to help inform the conversation."
AEI's measurement goes against the popular thought shared by many commentators, who suggest would-be homebuyers at the entry level of the market are being turned away due to too-tight credit standards.
While average FICO scores suggest lenders today are being choosier than they were during the housing bubble, the institute maintains that debt-to-income levels and loan-to-value ratios indicate a much looser credit environment than other reports might suggest.
In October, the group estimates two-thirds of first-time buyer mortgages had a combined loan-to-value ratio of 95 percent or higher, while one-fifth had a FICO score below 660, traditionally considered subprime.
"It's very difficult to say credit is tight when 50 percent of all agency purchase loans have down payments of 5 percent or less [or when] 66 percent of all first-time homebuyers are putting down 5 percent or less," Pinto said.
The center's experts suggest a sluggish economy and weak income growth are actually to blame for slower mortgage volumes, not credit standards.