Genworth Report: First-Time Homebuyer Demand Rose to the Highest Level Since 2000
Partially offsets slowdown in overall housing market as rising home prices suppress demand from repeat homebuyers
05 Dec, 2017, 08:00 ET
RICHMOND, Va., Dec. 5, 2017 /PRNewswire/ -- Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released its First-Time Homebuyer Market Report for the third quarter of 2017, which shows the highest level of first-time homebuyer demand since the third quarter of 2000, drawn from a data set of 21 million first-time homebuyers over a 24-year span:
- First-time homebuyers purchased 601,000 single-family homes compared to 567,000 during 3Q'16 – an increase of six percent, resulting in the highest quarterly purchase volume since September 30, 2000.
- First-time homebuyers accounted for 40 percent of all single-family homes sold and 56 percent of all purchase mortgages financed.
- For the first time since 2011, repeat homebuyer demand declined. This group bought five percent fewer homes during the quarter (888,000) compared to 3Q'16.
- Low down payment mortgages financed 467,000 sales to first-time homebuyers, which is the most loans in a quarter since the third quarter of 1999.
- The private mortgage insurance industry insured 181,000 loans to first-time homebuyers during 3Q'17, its highest level since the second quarter of 2007 and a 19 percent increase from 3Q'16. It represented the fastest-growing source of credit to first-time homebuyers in the mortgage industry. This compares to 197,000 FHA loans for the quarter, a six percent decrease from 3Q'16.
3Q'17 Analysis from Tian Liu, Chief Economist, Genworth Mortgage Insurance:
"First-time homebuyers bought the most homes in a quarter since the third quarter of 2000, buoying the broader housing market that had slowed during this period (-1% growth compared to Q3 of 2016). The surge in first-time homebuyer demand, and the decline in overall purchases, was driven by supply-demand imbalances in today's housing market.
Supply shortages are making homes less affordable, reducing incentives to existing homeowners who want to upgrade. This was a leading cause of the five percent quarterly decline in repeat buyers, which contributed to the one percent decline in overall home sales. It shows that the housing market is not working for all homebuyers.
While supply shortages continue to inflate home pricing, first-time homebuyer demand continues to increase because of a greater sense of urgency from rental and home price inflation, and greater housing need due to family formation. First-time homebuyers see more value in homeownership beyond a simple financial return on their investment.
Increased supply of low down payment mortgage products has facilitated first-time homebuyers' entry into the purchase market. During the quarter, seventy-eight percent of first-time homebuyers used a low-down payment product, an increase of five percent from a year ago. The low-down payment mortgage market experienced its highest level of demand from first-time homebuyers since the third quarter of 1999.
Lastly, first-time homebuyer growth is shifting the mortgage industry landscape in favor of the private sector. The private mortgage insurance industry was again the fastest-growing source of credit enhancement for first-time homebuyers within the mortgage industry. In contrast, the FHA program is beginning to contract. These trends suggest that the private mortgage insurance industry will likely become the largest source of credit enhancement for the first-time homebuyer market soon, taking over from the FHA."
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 21 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.
For access to the full report, visit: https://miblog.genworth.com/first-time-homebuyer-market-report-12-17
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.
From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
SOURCE Genworth Financial, Inc.
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