NAR report shows first-time home buyers returning to the market
An increasing number of first-time home buyers purchased homes during the month of April, according to a recent report from the National Association of Realtors (NAR), showing a key segment of the market may be returning.
Attractive home prices likely helped encourage home buying
activity from renters, experts with the trade association said. First-time home buyers represented 36 percent of all sales in April, up from 33 percent the previous month. Overall, existing home sales reached a seasonally adjusted annual pace of 5.05 million units, down slightly from the previous month.
Additionally, the median price on homes sold during the month was $163,700, up from $159,800 March. The median price on existing homes has now risen on a monthly basis for two consecutive months after hitting a recent low of $156,100 in February. That positive growth could show property values nationwide are beginning to stabilize, said the report.
Experts added those recent improvements in median home prices could bode well for the overall housing market, because they indicate home buyers
looking to move in could enjoy appreciating property values in the near future. That appeal could encourage more renters to leave their apartments and buy a home.
"Home values, despite month-to-month volatility, have been remarkably stable in the range of $160,000 to $170,000 for the past three years," explained Lawrence Yun, chief economist for the NAR. "Stable home prices in turn will steadily lower loan default rates, including strategic defaults."
A high level of housing affordability has been a primary driver of increasing first-time home buyer activity, Yun added. Mortgage rates remain near historic lows, and with property values finding some balance, more home buyers appear ready to take their pick from an ample supply of existing homes.
Ron Phipps, president of NAR, noted first-time home buyers could be a particularly vital component to the housing market because while they take away from the country's housing inventory through the purchase of a new home, they don't add another property to that supply. Repeat home buyers, meanwhile, normally have to sell a home before they can buy a new one.
First-time home buyers may also contribute to gains in the housing market in the coming months. NAR's most recent Pending Home Sales index reported a 5.1 percent increase in March. The index can typically foretell home sales activity over the following two months, meaning the real estate market could be in store for a busy late spring and early summer.