Prior to coronavirus making its way to the U.S., some things were looking up for the housing market.
More specifically, the first-time homebuyer market was very active in 2019, according to a new report from Genworth Mortgage Insurance.
“The number of first-time homebuyers showed strong year-over-year growth, at a pace not seen since the peak of the last housing cycle in 2006,” the report stated. “For the third consecutive year, the number exceeded two million, which is unprecedented in the past 26 years.”
According to the report, first-time homebuyer demographics are maturing, with growth shifting from first-timers to second-time homebuyers.
In the fourth quarter of 2019, first-time homebuyers represented 39% of all buyers in the single-family housing market, and 55% of all purchase money borrowers. Overall in 2019, first-time homebuyers represented 38% of all homebuyers in the single-family housing market and 56% of all purchase money borrowers.
For the second year in a row, low down payment conventional mortgages backed by private mortgage insurance have become the leading product for first-time homebuyers, the report said.
In 2019, 1.66 million first-time homebuyers used some form of low down payment mortgage, up just 1% from 2018. This is the second biggest year for the low down payment mortgage market in history, according to the report. Meanwhile, only 426,000 first-time homebuyers put down at least 20% of the purchase price.
Mortgage rates remained at then-record lows throughout the year, according to the Census Bureau and the Department of Housing and Urban Development. Sliding into the new year, January 2020’s total home sales, which is 7.9% above December’s pace, was also 18.6% higher than January 2019, when new home sales hit an annualized rate of 644,000.
“The tremendous growth in the first-time homebuyer market over the past five years shows that first-time homebuyers have been busy building careers, and places with abundant job opportunities also are very attractive to first-time homebuyers,” the report said.
