First-time Buyers, Single Women Gain Traction
The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.
NAR’s annual Profile of Home Buyers and Sellers shows that the share of sales to first-time home buyers in the 2016 survey ticked up to 35 percent after slipping for the previous three consecutive years. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent.
Lawrence Yun, NAR chief economist, says more new homeowners were able to break through what continues to be a laborious market for many trying to enter. “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” he said. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise.”
Although the increase in new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low .
“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” added Yun.
Single female buyers increase
As in year’s past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent. After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases.
“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” said Yun. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”