The last time sales to first-time buyers were as high as they were in September (34 percent), the number one song on the Billboard Hot 100 was “Call Me Maybe” by Carly Rae Jepson. That was back in June 2012.
It’s apparent in today’s release of September existing-home sales that many prospective first-time buyers were maybe making a lot of calls to the Realtor® they worked with to close the deal.
It’s been a long and frustrating slog in recent years for many young adults attempting to buy a home. A lack of affordable homes for sale, tight credit and difficulty saving for a down payment because of rising rents and repaying student debt has slowed them down.
But why the jump in September to 34 percent market share after it was just 31 percent in August? After all, it’s clear the aforementioned headwinds have yet to completely abate.
One likely reason is simply is the seasonal patterns of the housing market. Beginning in early spring through mid-summer, most prospective buyers with children are searching for homes with the hopes of closing before the school year starts. As the calendar turns to August, many of these homebuyers have already settled into their new home. Their diminishing presence by late summer creates more opportunities for first-time buyers looking to buy. This was extremely beneficial this year given the extremely tight supply conditions in many markets.
Looking ahead, Lawrence Yun, NAR chief economist, is hopeful the leap in sales to first-timers can stick through the rest of the year and into early spring. “The market fundamentals – primarily consistent job gains and affordable mortgage rates – are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.”
Historically, NAR’s data encompassing 35 years shows that the average share of first-time buyers is 40 percent. Last month was a positive step towards that level of activity, but there’s still a way to go.
Check out the charts below for additional insight on market conditions in September:
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