Genworth Mortgage Insurance, a unit of Genworth Financial, Inc. (NYSE: GNW), on Tuesday released the 12th edition of its First-Time Home Buyer Market Report, which showed market activity was strong in Q4, 2019 with 517,000 single-family purchased, up 6% from a year ago. First-time home buyers reached 2.18 million seasonally-adjusted annual rate in Q4, their fastest pace since 2006.

Full Year Overview

  • First-time home buyer market in the middle of a boom: A stronger second half pushed the first-time home buyer market to a strong full year result of 2.09 million. For the third consecutive year, the number of first-time home buyers exceeded 2 million, unprecedented in the past 26 years.
  • The most important customer segment for the housing industry: In 2019, 38% of all home buyers and 56% of purchase borrowers are first-time home buyers
  • First-time home buyer demographics maturing: The aging of the Millennial population implies that the increase in first-time home buyers over the age of 30 will likely lead to an overall increase in the number of first-time home buyers in the 25-44 age group in the order of 580,000 first-time home buyers over five years.
  • First-time home buyer growth turning headwind into tailwind for the second-time home buyer market: The pool of potential second-time home buyers increased for the first-time since 2008 to 8.3 million in 2019 and will grow by over three million in five years.
  • Strong first-time home buyer trends across states: States with fast job growth reported first-time home buyer growth rates of 44% between 2014 and 2019, compared to the 37% growth rate for states with slow job growth.
  • Improving housing affordability providing a better environment for first-time home buyers: In addition to lower mortgage rates, housing affordability also improved as home builders expanded building activity by 16% in the $200,000 to $400,000 price range, leading to the fastest growth in new homes sold since 2016.
  • Low-down payment mortgages essential for first-time home buyers: Financed 1.66 million (80%) first-time home buyers in 2019, up 1% from 2018. It was the second biggest year for the low-down payment mortgage market in history.
  • Private Mortgage Insurance (PMI) most-sold product: 720,000 first-time home buyers used conventional mortgages with PMI to finance their first home purchase in 2019, up 5% from a year ago.

Genworth Mortgage Insurance Chief Economist Tian Liu analyzed the report: "The housing market is in the middle of a multi-year boom in the first-time home buyer market. The market has exceeded 2 million first-time home buyers each year for the past three years, which is unprecedented in the past 26 years. In part, this represents a long overdue rebound from the trough earlier in the decade. The first-time home buyer market offers important insights into the housing market. With 38% of home sales and 56% of purchase loans in 2019, it is a market too big to ignore. I see the trend toward more affordable homes by home builders and a historically large PMI market as two results of the boom in the first-time home buyer market. Another feature of the housing market from the past five years is a lack of homeowner mobility, which has resulted in a flat repeat-buyer market in the middle of generally favorable economic conditions. The trend in the first-time home buyer market offers an explanation and a prediction. A prolonged depression in the first-time home buyer market between 2007 and 2015 led to a sharp decrease in the pool of potential second-time home buyers, resulting in lower homeowner mobility. But the strong growth in the last few years predicts that the repeat-buyer market and mobility should recover over the next five years. The tremendous growth in the first-time home buyer market over the past five years shows that first-time home buyers have been busy building careers, and places with abundant job opportunities are very attractive to first-time home buyers. But the sheer size of the market and the delay in expanding housing supply means that a first-time home buyer's paradise, a place with abundant job opportunity and highly-affordable housing, is difficult to find. Markets with abundant job opportunities and acute affordability challenges also are markets with the most opportunities to expand supply and policy intervention. In the meantime, first-time home buyers may have to compromise between job opportunities and housing affordability."