RICHMOND, Va., Dec. 16, 2020 /PRNewswire/ -- Genworth
Mortgage Insurance, an operating segment of Genworth Financial,
Inc. (NYSE: GNW), today released the 14th edition of its
Chief Economist's, Tian Liu,
First-Time Homebuyer Market Report for the third quarter of 2020.
The report aggregates all publicly available government data and
proprietary mortgage industry data into one digestible report. The
full analysis can be viewed at
https://miblog.genworth.com/first-time-homebuyer-market-report/.
Overview
- First-time homebuyer activity increased significantly due to
low interest rates, greater affordability, and re-ignited
appreciation of "home":
-
- Q3'20: 700,000 single-family homes were purchased by
first-time homebuyers, up 15.7% from a year ago
- The number of first-time homebuyers increased by 16.3% from the
second quarter to a seasonally-adjusted annual rate of 2.55 million
in Q3, the fastest pace on record
- First-time homebuyers represented 39 percent of single-family
home sales and 58 percent of all purchase mortgages
- Lower interest rates helped ease housing
affordability:
-
- Mortgage rates for first-time homebuyers decreased from 3.36%
in June to 3.01% in September, the lowest interest rate for
mortgages on record
- Compared to Q2, lower interest rates reduced mortgage payments
by four percent, while higher home prices increased mortgage
payments by three percent
- First-time homebuyers remain dependent on low-down payment
mortgages:
-
- Overall, 577,000 first-time homebuyers used some form of
low-down payment mortgage products to finance their home purchase
in Q3, or 82 percent of all first-time homebuyers
- PMI: Low-down payment conventional mortgages,
enabled by the PMI industry, helped a record 285,000 first-time
homebuyers in Q3, up 34 percent from a year ago
- FHA: The FHA loans program financed 195,000
first-time homebuyers during the quarter, an increase of 8 percent
from a year ago
- State-by-State COVID-19 Impact:
-
- An overwhelming number of states reported a higher number of
first-time homebuyers in Q3 compared to a year ago
- Only three states-- New York,
Pennsylvania, and Hawaii—reported
fewer first-time homebuyers in the quarter compared to a year
ago
- For most states, the booming third quarter has erased the sharp
declines in the first-time homebuyer market from Q2
- Year-to-date, 47 states and territories reported a higher
number of first-time homebuyers
- Repeat buyer market also reported strong growth
-
- Growth in the third quarter increased by 17 percent from a year
ago to 1.08 million units
- In the first 9 months, repeat buyers purchased a total of 2.55
million homes, down one percent compared to the same period last
year
- Decrease driven by the sharper slowdown in the repeat buyer
market during Q2
"The third quarter of 2020 was a remarkable quarter for both the
housing market and the first-time homebuyer segment, with the most
first-time homebuyers purchasing homes in 20 years, and the highest
level of home sales since 2006. Even though the economy is still in
the middle of the recession, and a large number of workers remained
unemployed or unable to participate in the labor force, there was
overwhelming demand for housing and homeownership from those still
able to purchase a home," said Tian
Liu, Chief Economist, Genworth Mortgage Insurance.
"The pandemic has increased preference for homeownership as
homes are serving as shelter, office, and classroom. Lower interest
rates have made homes more affordable, while reduced spending on
personal services, travel, and leisure has increased the share of
expenditure available for housing. A shift in housing preference
among existing homeowners is driving repeat buyer activities as
they look for different locations and different home features. The
housing boom has resulted in higher home prices and sparked an
increase in new construction of single-family
homes."
"The housing finance system continued to perform well during the
third quarter to ensure access to credit for first-time homebuyers.
The COVID-19 pandemic has stressed the housing finance system in
three ways: more hurdles to buy and sell homes; tighter credit
availability due to increased credit risk – both actual and
perceived; and lack of mortgage industry capacity due to rising
demand for refinancing. Credit availability for potential
first-time homebuyers can be especially vulnerable since first-time
homebuyers rely heavily on low-down payment mortgages for
financing."
About Genworth Mortgage Insurance's Chief Economist
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.
For access to the full report and charts, visit:
https://miblog.genworth.com/first-time-homebuyer-market-report/
About Genworth Mortgage Insurance
Genworth Mortgage
Insurance, an operating segment of Genworth Financial, Inc. (NYSE:
GNW), is headquartered in Raleigh, North
Carolina, and operates in all 50 states and the District of Columbia. Genworth Mortgage
Insurance works with lenders and other partners to help people
responsibly achieve and maintain the dream of homeownership by
ensuring the broad availability of affordable low down payment
mortgage loans. Genworth has been providing mortgage insurance
products and services in the U.S. since 1981.
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.
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SOURCE Genworth Mortgage Insurance