First-time homebuyers have been busier in 2016 than they were the previous year, getting a boost from both wage growth and mortgage rates that are still hovering near record lows.
In its 35th annual Profile of Home Buyers and Sellers, the National Association of Realtors said that first-time buyers accounted for 35 percent of U.S. home sales between July 2015 and July 2016, up from 32 percent the previous year. Historically, first-time buyers have typically accounted for 40 percent of home purchases in NAR’s survey.
Growing wages are likely helping many first-time buyers get in the game, with the median annual household income increasing to $88,500 in 2015. First-time buyers with a mortgage made down payments of 4 percent, compared with 16 percent for move-up buyers and 10 percent for all buyers.
The down payment remains the largest obstacle for all U.S. homebuyers, echoing results of a TD Bank survey earlier this year. Almost half of all buyers who are having difficulties amassing a down payment cite student loans as the culprit, with another 40 percent pointing to credit card debt.
First-time buyers face the additional challenge of not have proceeds from a previous home sale, which was the second most common way of securing a down payment behind personal savings. Owners who sold their homes this year received about $43,000 more than purchase price, helping them to trade up for larger properties.
Single first-time buyers must also must contend with competition from married couples, who accounted for 66 percent of home sales. In a recent analysis of NAR’s report by Inman News, Pacific Union Chief Economist Selma Hepp recounts her own experiences as a single homebuyer in the Los Angeles area, noting that couples — who benefit from dual incomes — are her biggest competition. Single women made up 17 percent of home sales over the past year, compared with 7 percent of single males.
First-time buyers account for about one-third of U.S. home purchases, and they tend to be younger and more tech-savvy than other demographics. So it’s no surprise that 44 percent of all buyers began the home research process online. More than 80 percent of respondents characterized online listing photos and detailed property descriptions as very useful.
But when the time comes to take action, the vast majority of both homebuyers and sellers contact a real estate professional to guide them through the process, a respective 88 and 89 percent. Only 8 percent of home sellers opted to market their properties themselves, the lowest share since the report’s inception in 1981.