Genworth Mortgage Insurance's Economist Report, First Quarter: First-Time Homebuyers Continue to Outperform Overall Housing Market Despite Slowdown
Lower interest rates and slower home price growth helped improve affordability for the first time since 2015 -- offering hope for the home selling season; Private mortgage insurance continued to help more first-time homebuyers
RICHMOND, Va., May 21, 2019 /PRNewswire/ -- Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released the First-Time Homebuyer Market Report from its Chief Economist, Tian Liu, for the first quarter of 2019. The report aggregates all publicly available government data and proprietary mortgage industry data into one digestible report. The full analysis and chart pack can be viewed at https://miblog.genworth.com/first-time-homebuyer-market-report.
Single-family home purchases decreased:
1Q'19: 401,000 single-family homes were purchased – a three percent decline from 1Q'18
Larger Share: First-time homebuyers accounted for 38 percent of single-family homes sold and 57 percent of purchase mortgages originated
Diverging Trends Across States: The slowdown spread to 38 states compared to 31 states in 4Q'18; 14 states reported more first-time homebuyer activity compared to 21 states a year ago
Improved housing affordability: The past three years saw a trend towards declining affordability. That trend reversed in Q1 as declining mortgage rates coupled with slowing home price growth in Q1 improved affordability.
The average interest rates for first-time homebuyers in Q1 decreased by 15 basis points to 4.89%, lagging the 41-basis point decrease in the Freddie Mac 30-year conventional mortgage rate
Low down payments still preferred:
321,000 (80 percent) of homebuyers used some form of low down payment mortgages to finance their first home purchase, a three percent decrease compared to a year ago
PMI: Conventional mortgages, enabled by the private mortgage insurance industry, helped 133,000 first-time homebuyers in Q1 – more than any other product. It was the only segment in the mortgage market to report any year-over-year growth.
Slowdown contributing factors: Next to affordability challenges, the recent government shutdown disrupted lending programs such as USDA's Single-Family Housing Loan Guarantee Program, which reported 6,000 fewer first-time homebuyers in Q1 compared to a year ago, a 30 percent decline
"First-time homebuyers continue to represent a large part of the activity in the housing market despite the slowdown in the overall market," said Tian Liu, Chief Economist, Genworth Mortgage Insurance. Q1 was a period of transition. The first-time homebuyer market experienced further slowdowns due to worsening affordability from the past three years. However, affordability began to improve, and further decreases in interest rates in Q1 suggest that affordability will have more room to improve, significantly reducing the cause of the original slowdown. Low down payment mortgage products remain critical in financing their first home purchase, and private mortgage insurance is now the undisputed leader in this market."
About Genworth's First-Time Homebuyer Market Report The First-Time Homebuyer Market Report is the only economic series measuring the number of home sales and mortgages to first-time homebuyers covering the entire housing market. This report provides quarterly estimates of the first-time homebuyer market since the first quarter of 1994—spanning two housing cycles and 24 years. It provides a historical perspective necessary to understand today's first-time homebuyer market. It is based on a sample size of 23.2 million first-time homebuyers from government reports and industry data. By capturing the entire market over a long period, and providing the latest market snapshot, this report makes the first-time homebuyer market more visible to housing industry participants and policymakers.
About Genworth Financial Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
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Disclaimer Opinions, analyses, estimates, forecasts, and other views included in these materials are those of Tian Liu, are based on current market conditions and are subject to change without notice, do not necessarily represent the views of Genworth or its management, and should not be construed as indicating Genworth's business prospects or expected results. Neither Tian Liu nor Genworth guarantees that the information provided in these materials is accurate, current, or suitable for any particular purpose. Forward looking statements should not be considered as guarantees or predictions of future events.