First-time buyers purchased more homes in 2018 since housing crisis

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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%.

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First time home buyers Down payments Housing affordability Purchase PMI Mortgage rates Home prices Genworth