RICHMOND, Va., May 24, 2018 /PRNewswire/ -- Genworth
Mortgage Insurance, an operating segment of Genworth Financial,
Inc. (NYSE: GNW), today released its First-Time Homebuyer Market
Report for the first quarter of 2018. The report aggregates all
publicly-available government data and proprietary mortgage
industry data into one dataset. The below highlights are followed
by analysis from Genworth's Chief Economist, Tian Liu.
Q1'18 Overview
- First-time homebuyers purchased 411,000 single-family homes, a
decline of two percent from the first quarter of 2017.
- First-time homebuyers accounted for 37 percent of single-family
homes sold and 57 percent of purchase mortgages financed.
- Home sales without financing (all-cash transactions) and
purchase loans made by investors were up 11,000 units, or three
percent from a year ago suggesting an increase in speculative
demand and otherwise a more competitive environment among potential
homebuyers.
- For the first time since the first quarter of 2012, home sales
grew faster than home purchase originations. The number of purchase
loans for the purchase of owner-occupied homes were down 2 percent
from a year ago, while home sales stayed flat.
- In the first quarter, 81 percent of first-time homebuyers used
low down payment mortgages, while only 19 percent used high down
payment mortgages.
- Low down payment mortgages financed 332,000 home sales to
first-time homebuyers, a one percent decline from a year ago, and
represented 69 percent of purchase loans originated, the highest
since the first quarter of 2010.
- Conventional loans with mortgage insurance financed 127,000
home sales to first-time homebuyers, an 18 percent increase from a
year ago, marking the 27th consecutive quarter of growth
for the mortgage insurance industry and the best first quarter
since 1995.
- Among new single-family homes, homebuilders reported rapid
sales growth in homes priced between $250,000 and $300,000, an increase of 17 percent from the
first quarter of 2017 (the median first-time homebuyer price range
is $250,000 and below).
2018 Macro Outlook
- Higher mortgage rates have increased the cost of financing, and
may have contributed to lower home sales.
- Despite the increased homebuilding activities at the "lower"
end of the market, the supply response has been insufficient in
easing inventory pressure.
- Contrary to most forecasts, we believe that strong first-time
homebuyer demand and an insufficient supply increase will keep home
prices growing at their current pace.
- Housing supply will continue to expand to meet the strong
first-time homebuyer demand. In addition to new construction, we
will also likely see the conversion of rental units back to
owner-occupied properties, lower vacancy rates, and increased
remodeling activities.
Comments from Tian Liu, Chief
Economist, Genworth Mortgage Insurance:
"This quarter's decline in first-time homebuyer sales reflects a
slowdown in cyclical momentum as the first-time homebuyer market
approached its historical norms. It also reflects a shortage of
available homes priced at or below the median first-time homebuyer
market price of $250,000. While for
the first time since 2014 first-time homebuyer demand is slightly
easing, supply pressures will continue to drive price appreciation
and freeze out a large percentage of the 2.7 million first-time
homebuyers who are still missing from the market.
We believe that the housing market is becoming overheated, which
is supported by this quarter's growth of all-cash transactions and
purchase loans made by investors, and the corresponding decrease in
first-time homebuyers. It is becoming increasingly common to see
multiple offers submitted on a property, which results in purchase
prices surpassing listing prices, as well as inflated home prices,
making cash offers more coveted. Because first-time homebuyers
prefer using debt over cash when purchasing a home, this quarter's
surge in cash purchases is a competitive disadvantage to them and
helps explain their pull-back.
Despite the current headwinds, we have begun to see an
acceleration of homes built at slightly lower price points, a
change from the homebuilding at higher price points we have been
seeing. We see this as a positive market change that will support
an increase of first-time homebuyer purchases and lead to fewer
buyers being priced out of the market. If this trend gains
meaningful traction, new construction will play a larger role in
meeting first-time homebuyer demand.
More broadly, we are not overly concerned by this quarter's
slow-down in first-time homebuyer purchase growth and remain
optimistic that this demographic will continue dominating the
mortgage market and growing its market share. To address the
housing supply inadequacies, we call on policymakers to encourage
production of new homes at lower price points by abstaining from
regulations that restrict affordable housing (zoning), access to
low-cost building supplies (tariffs and quotas), and labor supply
(immigration)."
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-05-18/
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
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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.
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SOURCE Genworth Mortgage Insurance