RICHMOND, Va., Aug. 29, 2017 /PRNewswire/ -- During the second
quarter of 2017, first-time homebuyers purchased 570,000
single-family homes compared to 426,000 last quarter, marking the
highest number of first-time homebuyer purchases during a second
quarter since 1999, which had 599,000, according to the First-Time
Homebuyer Market Report, released today by Genworth Mortgage
Insurance, an operating segment of Genworth Financial, Inc. (NYSE:
GNW).
First-Time Homebuyers Outpace Housing and Mortgage
Market
While the number of single-family home sales increased by just
two percent during the quarter from a year ago, purchase mortgage
origination increased by five percent, and sales and mortgages made
to first-time homebuyers increased by eight percent. This
resulted in a higher first-time homebuyer mix in both
markets.
First-time homebuyers accounted for 36 percent of all
single-family homes sold during the second quarter, up from 34
percent a year ago. In the mortgage market, they accounted
for 57 percent of all purchase mortgages originated, up from 56
percent a year ago. Historically, first-time homebuyers have
accounted for 35 percent of single-family housing market and 45
percent of the purchase mortgage market.
"The rapid growth in the first-time homebuyer market that began
in 2015 continued into the second quarter. As the housing
market matures, first-time homebuyers are becoming an even more
important source of growth," said Tian
Liu, Chief Economist for Genworth Mortgage Insurance.
"Whether one looks at the three million missing first-time
homebuyers since 2007 or the historically low homeownership rate
among young households, the potential growth opportunity remains
large and will likely take years to play out. The current
housing cycle will be defined by first-time homebuyers."
A key driver was an improved effort by homebuilders to build
more single-family homes priced between $200,000 and $250,000, the segment most popular
with first-time homebuyers. This was the fastest-growing segment
for homebuilders, accounting for 36 percent of all homes purchased
during the second quarter and 33 percent year-over-year growth.
However, while homebuilders have increased their focus on building
homes within this price range, volume growth has still not caught
up due to a low starting level, growing modestly by 13,000 units in
the first half of the year.
"As first-time homebuyers continue outpacing the rest of the
single-family homes market, homebuilders have begun adjusting their
products further down the pricing curve," said Liu. "However, the
growth in supply has not been sufficient enough to offset the
supply-demand imbalance, leaving many potential first-time
homebuyers still frozen out of the market."
The supply shortage of new, affordable starter homes has also
led to a sharp decline in vacant homes for sale, sending the
homeowner vacancy rate during the second quarter into its lowest
level since 1994, which Genworth Mortgage Insurance believes will
continue to drive home price appreciation.
"While many forecasters predict that increased supply will stem
home price appreciation, we believe a slowdown in home price
appreciation will be unlikely in 2017 and 2018," said Liu.
"We do not believe that the strong growth in home prices is leading
to another housing bubble. A key feature of housing bubbles
is speculative demand. Today, first-time homebuyers are out-bidding
investors and cash-buyers."
Booming First-Time Homebuyer Demographic Uses Less Cash,
Accrues Mortgage Debt
First-time homebuyers continued to rely on low-down payment
mortgages during the second quarter, financing 448,000 homes, or 78
percent of all purchases. This represents a year-over-year increase
of eight percent, exceeding the growth in the purchase origination
market. "Faster growth in the low down payment mortgage market is
primarily the result of an expanding first-time homebuyer market,
rather than a relaxation of lending standards," said Liu. "As long
as the expansion in the first-time homebuyer market continues, low
down payment mortgages will continue to outpace the rest of the
mortgage market." The surge in home financing shows that first-time
homebuyers are driving mortgage credit expansion, taking on
mortgage debt to fulfill homeownership priorities, and shifting
their debt appropriation away from other sources like student
loans. Over time, this is expected to drive faster growth in the
amount of outstanding mortgage debt which has grown by just
one-to-two percent in 2015 and 2016.
PMI Products Outgrowing FHA
Among the low down payment products utilized by first-time
homebuyers, conventional loans with 97 LTVs became more popular
with both lenders and borrowers. Year over year, first-time
homebuyer purchases using private mortgage insurance increased by
163,000, or 17 percent. As such, during the second quarter, 58
percent of growth in first-time homebuyer purchases came from the
private mortgage insurance market, compared to nine percent coming
from Federal Housing Administration (FHA) products. FHA and other
government lending programs remain three times as large as they
were in 2007 in terms of their exposure to the first-time homebuyer
market. Under the current policy, their share of the mortgage
market is expected to grow because of their specialization in low
down payment mortgages.
About Genworth's First-Time Homebuyer Market Report
The First-Time Homebuyer Market Report is the only economic
series measuring the number of home sales and mortgages to
first-time homebuyers covering the entire housing market.
This report provides quarterly estimates of the first-time
homebuyer market between the first quarter of 1994 and the second
quarter of 2017 – spanning two housing cycles and 24 years. It
provides a historical perspective necessary to understand today's
first-time homebuyer market. It is based on a sample size of
20.9 million first-time homebuyers from government reports and
industry data, which is larger than any aggregate report on
record. By capturing the entire market over a long period,
and providing the latest market snapshot, this report will make the
first-time homebuyer market more visible to housing industry
participants and policymakers.
For access to the full report and fact sheet, visit:
https://miblog.genworth.com/first-time-homebuyer-market-report-08-17/.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance
holding company committed to helping families achieve the dream of
homeownership and address the financial challenges of aging through
its leadership positions in mortgage insurance and long term care
insurance. Headquartered in Richmond, Virginia, Genworth traces its roots
back to 1871 and became a public company in 2004. For more
information, visit genworth.com.
From time to time, Genworth releases important information via
postings on its corporate website. Accordingly, investors and other
interested parties are encouraged to enroll to receive automatic
email alerts and Really Simple Syndication (RSS) feeds regarding
new postings. Enrollment information is found under the "Investors"
section of genworth.com. From time to time, Genworth's
publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
http://www.genworth.com.au.
View original
content:http://www.prnewswire.com/news-releases/first-time-homebuyer-demand-continues-to-outpace-housing-and-mortgage-market-driving-home-pricing-appreciation-300510835.html
SOURCE Genworth Financial, Inc.