As the summer warms up, the heat is on in the housing market, led by first-time home buyers. The industry has seen as significant uptick in home purchases by those who may have been weighing their options last year. According to the National Association of Realtors’ most recent Existing Home Sales Report, first-time buyers made up 32% of all sales in the month of May, up 27% from the same time last year.
“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs,” said NAR’s Chief Economist, Lawrence Yun.
“More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.
“There are many factors that could be driving new home buyers to finally pull the trigger and buy their first home. From the tax benefits that come with home ownership, to steadily rising home prices and increases in mortgage rates, the scale has been stacking high in favor of home purchases.
“Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers,“ Yun went on to say.
“However, overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated —even with higher mortgage rates above 4 percent.”
Decreased supply and an influx of new home buyers means higher competition for prospective home buyers. As we near the natural end of “real estate season”, this new jump in first-time purchases is indicative of a shift in buyer behavior significant enough to see an elongated buying season for 2015.
If you are still considering buying a home this year, it’s critical to start the processnowby getting educated about the financial side of mortgage..Meet with a real estate mortgage professional today to learn about your options and assess the best direction to take in your home search.