First-Time Homebuyers Dominate Housing Market in October, Latest Campbell/Inside Mortgage Finance Monthly Survey Finds
WASHINGTON, DC (November 23, 2009)— Home sales to first time homebuyers surged in October, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. But real estate agent survey respondents indicate that trend may not continue in the months ahead.
Some 47 percent of the home purchase transactions tracked in October went to first-time homebuyers, the survey found. This was up from a 42 percent level in September and was largely attributed to a rush by consumers to capitalize on the $8,000 home purchase tax credit that was originally set to expire in November.
“First-time homebuyers were an enormous factor in the housing market in October for two reasons,” commented Thomas Popik, research director for Campbell Surveys. “First, a lot of first-time homebuyers were trying to beat the expiration of the tax credit in November. Second, other buyers began to desert the market—particularly investors buying damaged foreclosed properties—and this increased the relative proportion of first-time homebuyers.”
Survey respondents reported that investors reduced their presence in the housing market nationwide during October as the supply of deeply discounted foreclosed properties declined. Investors accounted for 15 percent of home purchase transactions tracked in October, down from 19 percent in September.
The diminished supply of foreclosed properties – and rise in non-distressed home sales – in October resulted in a jump in the average price paid by first-time homebuyers. The survey found the average home purchase price paid by first-time homebuyers rose from $184,600 in September to $192,900 in October.
The October survey results also highlighted the dependence of first-time homebuyers on FHA financing. A huge 61 percent of first-time homebuyer purchases were financed by FHA loans during the month of October. This compared to 58 percent in September.
Real estate agents responding to the survey gave a hint that demand by first-time homebuyers may not continue at current levels. A diffusion index produced from survey results showed that first-time homebuyer traffic – a leading indicator of transactions several months from now – significantly decelerated from September to October.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions is based on a national survey of more than 1,500 real estate agents each month and provides up-to-date intelligence on home sales and mortgage usage patterns.
Contact: John Campbell, (202) 363-2069, email@example.com.