Rates and housing values are at multi-year highs, so there probably aren’t many first-time homebuyers (FTHB) entering the market, right? Not so.
In the first two months of 2024, FTHBs made up more than a third of all purchase transactions, compared to only 13% in 2016 (see chart). Yes, more established homeowners are staying put, but that’s still a stunning increase in the overall mix.
Not surprisingly, first-time buyers are more likely to go with a government lending program, given their lower thresholds for credit scores and down payments than conforming loans. As the chart shows, government loans now fund over half of FTHB purchases, but the numbers are also up significantly for conforming and non-conforming loans.
We believe demographic trends and pent-up demand will continue to drive this growth trend. Lenders seeking to capture more of this segment will need to have robust offerings that include down payment assistance and other programs specifically focused on first-time buyers.
FTHB Market Share Of Purchase Transactions By Product Group
Demographics and pent-up demand should sustain growth in FTHB purchases.
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