First-time home buyers were more active in the first three quarters of 2018 than at any time since 2005, Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), reported today.

Among the findings of the First Time Home Buyer Market Report:

• 3Q'18: 582,000 single-family homes were purchased – a 1% year-over-year increase • 9M'18: 1,580,000 single-family homes were purchased – the most during the first nine months of a year since 2005
• Larger Share: First-time homebuyers accounted for 40% of single-family homes sold and 55% of purchase mortgages originated, both higher than a year ago
• Diverging Trends Across States: Unlike the 2014-17 period when almost all states reported more first-time home buyer activities, only two-thirds of states reported growth in Q3
• Lower housing affordability: Monthly mortgage payments for first-time home buyers increased by 15% year-over-year from higher interest rates (up eight% more) and higher home prices (up over 6%)
• Home buyers Favoring Lower-Priced Homes: Prices for the most expensive 40% of homes bought by first-time home buyers declined for the first-time since 2013-14
• Sales of Affordable New Homes Grew: New homes priced between $200,000 and $300,000 were one of the few price segments to show year-over-year growth, up by 15%, while demand for homes priced between $300,000 and $750,000 decreased by 5%
• PMI Most-Sold Product: 202,000 home buyers used conventional mortgages with private mortgage insurance to finance their first home purchase, a 17% year-over-year increase. For two consecutive quarters conventional loans with mortgage insurance were the single-largest source of credit for first-time home buyers
• Low Down Payments Still Preferred: 463,000 (80%) of homebuyers used low down payment mortgages to finance their first home purchase
• Young Homeowner Demand Grows: Homeownership rates for households under 35 years of age increased by 1.2% during the third quarter

Tian Liu, chief economist at Genworth Mortgage Insurance, issued the following analysis: "First-time home buyers adjusted to declining affordability by buying cheaper homes. In previous quarters, that showed up as stronger home price gains at the lower end. This quarter, instead, home prices declined at the higher end – for the first time since the 2013-14 'Taper-Tantrum event. This bears monitoring since lower prices and weaker demand could cascade into the first-time home buyer market at the lower end.

"A more resilient first-time home buyer market and a move by home buyers toward lower-priced homes also affected the new construction market. New homes between $200,000 and $300,000, where there are more first-time buyers, saw a 15% increase, while those priced between $300,000 and $750,000, where there are more repeat buyers, saw declines ranging from 3 –12%," Liu stated.