The housing market is likely changing to predominantly repeat purchasers, even as growth in the first-timer buyer segment continued in the third quarter, a study from Genworth found.
“Sales in the repeat buyer market saw its fastest growth since the early years in the current housing cycle and if sustained, this could suggest a shift in the growth drivers in the housing market from first-time buyers to repeat buyers,” Tian Liu, chief economist at Genworth Mortgage Insurance, said in a press release.
“More importantly, it may suggest a turnaround in homeowner mobility, which has been depressed this cycle. Falling mortgage rates and the large increase in supply in the affordable segment is helping to stabilize home price growth and improve affordability — this has been the most positive trend this year and has benefited the entire housing industry as well as homebuyers.”
The number of repeat homebuyers grew by 7% from a year ago to 936,000, making the third quarter one of the fastest growing since 2013.
At the same time, first-time homebuyers purchased 591,000 homes during the quarter, up 1% from the same period in 2018. There was a 9% increase from the second quarter to a seasonally adjusted rate of 214 million.
First-time buyers took out 55% of all purchase mortgages in the third quarter, the same as one year ago but down from 56% in the second quarter and 57% in the first quarter. The historical average (since 1994) is 46%, Genworth said.
“The first-time homebuyer market rebounded this quarter and although the rebound was modest compared with the number of first-time homebuyers a year ago, and a quarter behind the broad rebound, it was a strong rebound from the previous quarter allowing first-time homebuyers to make up some lost ground,” said Liu.
About 80% of first-time buyers used low down payment mortgage products in the third quarter. Approximately 209,000, or 35% of these buyers, obtained a low down payment conventional mortgage (which typically require private mortgage insurance). Another 251,000 used some form of government insured or guaranteed product (Federal Housing Administration, Veterans Affairs or U.S Department of Agriculture) in the quarter; FHA alone accounted for 175,000 of that total.