RICHMOND, Va., May 24, 2018 /PRNewswire/ -- Genworth
Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released its First-Time Homebuyer Market
Report for the first quarter of 2018. The report aggregates all publicly-available government data and proprietary mortgage
industry data into one dataset. The below highlights are followed by analysis from Genworth's Chief Economist, Tian Liu.
Q1'18 Overview
- First-time homebuyers purchased 411,000 single-family homes, a decline of two percent from the first quarter of 2017.
- First-time homebuyers accounted for 37 percent of single-family homes sold and 57 percent of purchase mortgages
financed.
- Home sales without financing (all-cash transactions) and purchase loans made by investors were up 11,000 units, or three
percent from a year ago suggesting an increase in speculative demand and otherwise a more competitive environment among
potential homebuyers.
- For the first time since the first quarter of 2012, home sales grew faster than home purchase originations. The number of
purchase loans for the purchase of owner-occupied homes were down 2 percent from a year ago, while home sales stayed flat.
- In the first quarter, 81 percent of first-time homebuyers used low down payment mortgages, while only 19 percent used high
down payment mortgages.
- Low down payment mortgages financed 332,000 home sales to first-time homebuyers, a one percent decline from a year ago, and
represented 69 percent of purchase loans originated, the highest since the first quarter of 2010.
- Conventional loans with mortgage insurance financed 127,000 home sales to first-time homebuyers, an 18 percent increase
from a year ago, marking the 27th consecutive quarter of growth for the mortgage insurance industry and the best
first quarter since 1995.
- Among new single-family homes, homebuilders reported rapid sales growth in homes priced between $250,000 and $300,000, an increase of 17 percent from the first quarter of 2017
(the median first-time homebuyer price range is $250,000 and below).
2018 Macro Outlook
- Higher mortgage rates have increased the cost of financing, and may have contributed to lower home sales.
- Despite the increased homebuilding activities at the "lower" end of the market, the supply response has been insufficient
in easing inventory pressure.
- Contrary to most forecasts, we believe that strong first-time homebuyer demand and an insufficient supply increase will
keep home prices growing at their current pace.
- Housing supply will continue to expand to meet the strong first-time homebuyer demand. In addition to new construction, we
will also likely see the conversion of rental units back to owner-occupied properties, lower vacancy rates, and increased
remodeling activities.
Comments from Tian Liu, Chief Economist, Genworth Mortgage Insurance:
"This quarter's decline in first-time homebuyer sales reflects a slowdown in cyclical momentum as the first-time homebuyer
market approached its historical norms. It also reflects a shortage of available homes priced at or below the median first-time
homebuyer market price of $250,000. While for the first time since 2014 first-time homebuyer demand
is slightly easing, supply pressures will continue to drive price appreciation and freeze out a large percentage of the 2.7
million first-time homebuyers who are still missing from the market.
We believe that the housing market is becoming overheated, which is supported by this quarter's growth of all-cash
transactions and purchase loans made by investors, and the corresponding decrease in first-time homebuyers. It is becoming
increasingly common to see multiple offers submitted on a property, which results in purchase prices surpassing listing prices,
as well as inflated home prices, making cash offers more coveted. Because first-time homebuyers prefer using debt over cash when
purchasing a home, this quarter's surge in cash purchases is a competitive disadvantage to them and helps explain their
pull-back.
Despite the current headwinds, we have begun to see an acceleration of homes built at slightly lower price points, a change
from the homebuilding at higher price points we have been seeing. We see this as a positive market change that will support an
increase of first-time homebuyer purchases and lead to fewer buyers being priced out of the market. If this trend gains
meaningful traction, new construction will play a larger role in meeting first-time homebuyer demand.
More broadly, we are not overly concerned by this quarter's slow-down in first-time homebuyer purchase growth and remain
optimistic that this demographic will continue dominating the mortgage market and growing its market share. To address the
housing supply inadequacies, we call on policymakers to encourage production of new homes at lower price points by abstaining
from regulations that restrict affordable housing (zoning), access to low-cost building supplies (tariffs and quotas), and labor
supply (immigration)."
About Genworth's First-Time Homebuyer Market Report
The First-Time Homebuyer Market Report is the only economic series measuring the number of home sales and mortgages to
first-time homebuyers covering the entire housing market. This report provides quarterly estimates of the first-time homebuyer
market since the first quarter of 1994—spanning two housing cycles and 24 years. It provides a historical perspective necessary
to understand today's first-time homebuyer market. It is based on a sample size of 21 million first-time homebuyers from
government reports and industry data. By capturing the entire market over a long period, and providing the latest market
snapshot, this report makes the first-time homebuyer market more visible to housing industry participants and policymakers.
For access to the full report, visit: https://miblog.genworth.com/first-time-homebuyer-market-report-05-18/
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve
the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance
and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its
roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and
other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds
regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth
Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information
can be found at http://genworth.ca and http://www.genworth.com.au.
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SOURCE Genworth Mortgage Insurance