A decline in first time home buyers is a major reason for the sluggish housing recovery in America, say experts.
Housing starts fell 2.8% in October from a month earlier to a seasonally adjusted annual rate of 1.009 million units, according to the Commerce Department. The share of first time home buyers has reached a historical low, slowing the otherwise improving real estate markets.
A recent annual survey by the National Association of Realtors (NAR) suggested that only 33% of existing homes sold this year were bought by first-time buyers, down from 38% last year, and the lowest level since 1987. The share of first time home buyers typically hovers around 40%, according to the NAR.
“Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” said Lawrence Yun, NAR chief economist.
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“Adding more bumps in the road, is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”
The median age of first-time buyers was 31 and while the typical repeat buyer was 53 years, according to the survey.
Housing markets in the USA are on the road to recovery. Though housing starts fell in October, a there was a jump in construction of new single family homes, up by 4.2% in October to reach its best pace since November 2013, according to the Commerce Department.
Building permits also rose by 4.8% in October, the maximum increase since June 2008.
This article was republished with permission from Global Property Guide.