RICHMOND, Va., Sept. 15, 2020 /PRNewswire/ -- Genworth
Mortgage Insurance, an operating segment of Genworth Financial,
Inc. (NYSE: GNW), today released the 13th edition of the
First-Time Homebuyer Market Report, authored by its Chief
Economist, Tian Liu, for the second
quarter of 2020. The report aggregates all publicly available
government data and proprietary mortgage industry data into one
digestible report. The full analysis can be viewed at
https://miblog.genworth.com/first-time-homebuyer-market-report/.
Overview
- First-time homebuyer activity decreased largely due to
economic shutdown, but remained the most active segment:
-
- 2Q'20: 539,000 single-family homes were purchased by
first-time homebuyers, down 4.6% from a year ago
- The number of first-time homebuyers decreased by 18 percent
from the previous quarter to a seasonally adjusted annual rate of
1.86 million in Q2, the slowest pace since 2016
- First-time homebuyers represented 40 percent of single-family
home sale and 57 percent of all purchase mortgages
- Slower pace in first-time homebuyer activity still yielded just
over 1 million Americans becoming first-time homebuyers in the
first half of 2020, which was four percent higher than a year
ago
- First-time homebuyers out-performed repeat buyers in Q2; repeat
buyer market decreased by 19 percent from a year ago to 793,000
units
- Lower rates helped to ease housing affordability:
-
- Mortgage rates for first-time homebuyers fell to 3.36% in June,
the lowest point since 2012, reducing the monthly principal and
interest cost by two percent from Q1
- First-time homebuyers more dependent on low-down payment
mortgages during the pandemic:
-
- Overall, 449,000 first-time homebuyers used some form of
low-down payment mortgage products to finance their home purchase
in Q2, or a record 83 percent of all first-time homebuyers
- PMI: Low-down payment conventional mortgages, enabled by
the private mortgage insurance industry, helped 207,000 first-time
homebuyers in Q2; PMI financed 38 percent of first-time homebuyers,
up from 30 percent in the first quarter, and a new record for the
industry
- FHA: The FHA market financed 30 percent of first-time
homebuyers, down from 35 percent in the first quarter
- State-by-State COVID-19 Impact:
-
- Housing market staged a strong recovery in May and June that
exceeded all expectations
- Nationally, the number of rate locks by first-time homebuyers
increased by 55 percent between April and June; No states reported
negative growth during this period
- New York, Pennsylvania, New
Jersey and Michigan saw
recoveries in first-time homebuyer rate locks of over 100 percent
between April and June
- A total of 35 states and Puerto
Rico reported fewer first-time homebuyers compared to the
same period a year ago, but 15 states and the District of Columbia reported more first-time
homebuyers
"The COVID-19 pandemic pushed the U.S. economy into the sharpest
recession on record in March. The housing market also began
correcting in April, resulting in an 18 percent decrease in the
number of first-time homebuyers in the second quarter compared to
the first quarter. A quick rebound in May moderated the
market decline," said Tian Liu,
Chief Economist, Genworth Mortgage Insurance.
"Overall, the housing finance system was able to maintain credit
availability for first-time homebuyers during the COVID-19 pandemic
given the enormous challenges. The percentage of home sales to
first-time homebuyers did not decrease from its pre-COVID-19
levels, and the percentage of first-time homebuyers using low-down
payment mortgages increased to 83 percent, which is higher than the
historical average. The private mortgage insurance industry played
a significant role in maintaining credit availability, financing
over 200,000 first-time homebuyers, or almost four out of every ten
first-time homebuyers. Credit availability did contract more
noticeably for FHA loans and conventional loans not backed by
Fannie Mae and Freddie Mac. This may have had a bigger impact on
borrowers with weaker credit histories. The main reasons that the
housing finance system has largely maintained credit availability
to date include a focus on prudent underwriting, having adequate
capital in the financial system, a significant presence for the
agency market that will take credit risk during periods of market
stress, and continued investment in technology to make the industry
capacity more elastic."
"The stronger rebound in repeat buyers suggests that homeowners
may be reassessing their housing needs to take into account the
likelihood of a continued work from home arrangement, online
education for children, and more attractive home prices. Growth
slowed among both first-time homebuyers and repeat buyers in July,
resulting in a seven percent decline in the number of first-time
homebuyers and a seven percent increase in the number of repeat
buyers between June and July. The initial strong growth may have
benefited from more affordable home prices, as housing demand
recovered, and average loan sizes. By implication, home prices also
have rebounded so the overall affordability has become less
favorable compared to earlier in the year."
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 since the
first quarter of 1994—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 23.2
million first-time homebuyers from government reports and industry
data. By capturing the entire market over a long period, and
providing the latest market snapshot, this report makes the
first-time homebuyer market more visible to housing industry
participants and policymakers.
For access to the full report and charts, visit:
https://miblog.genworth.com/first-time-homebuyer-market-report/
About Genworth Mortgage Insurance
Genworth Mortgage
Insurance, an operating segment of Genworth Financial, Inc. (NYSE:
GNW), is headquartered in Raleigh, North
Carolina, and operates in all 50 states and the District of Columbia. Genworth Mortgage
Insurance works with lenders and other partners to help people
responsibly achieve and maintain the dream of homeownership by
ensuring the broad availability of affordable low down payment
mortgage loans. Genworth has been providing mortgage insurance
products and services in the U.S. since 1981.
Disclaimer
Opinions, analyses, estimates, forecasts,
and other views included in these materials are those of
Tian Liu, are based on current
market conditions and are subject to change without notice, do not
necessarily represent the views of Genworth or its management, and
should not be construed as indicating Genworth's business prospects
or expected results. Neither Tian
Liu nor Genworth guarantees that the information provided in
these materials is accurate, current, or suitable for any
particular purpose. Forward looking statements should not be
considered as guarantees or predictions of future events.
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SOURCE Genworth Mortgage Insurance