The number of single-family houses purchased by first-time homebuyers fell year-to-year as 2018 got underway, reversing a trend that has been in place since 2014.
Single-family homes purchased by first-time homebuyers during the fiscal period fell 2% from a year ago to 411,000, according to a recent Genworth Mortgage Insurance report.
The decline "reflects a slowdown in cyclical momentum as the first-time homebuyer market approached its historical norm. It also reflects a shortage of available homes priced at or below the median first-time homebuyer market price of $250,000," said Genworth Chief Economist Tian Liu in a press release.
Sales of homes priced between $250,000 and $300,000 rose 17% year-to-year.
Also total home sales in the first quarter outpaced purchase originations for the first time since the same period in 2012, according to Genworth's analysis of government and proprietary mortgage industry data. Home sales remained stable during the period, while purchase loans dropped 2%.
First-time buyers account for the majority of purchase mortgage originations at 57%, but these entry-level consumers account for just 37% of all homes sold.
All-cash home purchases that occurred without financing and purchase loans made by investors rose 3% year-to-year.
This suggests that homebuyers may be facing more competition from speculative demand, according to Genworth.
"We believe that the housing market is becoming overheated, which is supported by this quarter's growth of all-cash transactions and purchase loans made by investors, and the corresponding decrease in first-time homebuyers," said Liu.
"It is becoming increasingly common to see multiple offers submitted on a property, which results in purchase prices surpassing listing prices, as well as inflated home prices, making cash offers more coveted.
"Because first-time homebuyers prefer using debt over cash when purchasing a home, this quarter's surge in cash purchases is a competitive disadvantage to them and helps explain their pull-back."