First-time buyers purchased more homes in 2018 since housing crisis
Rises in the amount of low down payment loans and private mortgage insurance due to tight affordability led to the most first-time homebuyers since 2006, according to Genworth Mortgage Insurance.
Millennials brought down payment amounts lower since they represent the biggest hurdle to buying a house. Private mortgage insurance also increased in popularity, seeing the largest growth of all loan types for the year with a 14% annual gain.
"Low down payment mortgages — and conventional loans with private mortgage insurance, in particular — play a very important role in supporting first-time homebuyers, and even more so in a market with declining affordability. The private mortgage insurance industry now serves twice as many first-time homebuyers compared to 2014," Tian Liu, Genworth's chief economist, said in a press release.
Overall, 2.07 million first-time buyers bought single-family homes in 2018, edging up less than 1% from the year prior. They accounted for around 38% of total 2018 sales, a percentage that's been on the rise since 2011.
"The first-time homebuyer market once again outperformed the broader housing market, recording its best purchase year since 2006 and regaining its pre-housing crisis level," Liu said. "At the same time, first-time homebuyers are not immune to declining affordability, as their number declined nationally and in 35 states in Q4. First-time homebuyers responded to declining affordability by taking a wait-and-see approach and opportunistically looking for lower-priced properties."
Four states had double-digit year-over-year jumps in first-time buyers. South Dakota was first with a 19.5% increase, then New Mexico's 18.6%, Nebraska's 16.1% and West Virginia's 13% followed. On the opposite end of the spectrum, the biggest annual declines in first-time buyers were in Alaska, at 10.8%, North Dakota, at 9.5%, and Michigan, at 9%.