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FHFA Brief 14-2: First-Time Homebuyer Share and House Price Growth

Published: 7/31/2014
Author:

​Saty Patrabansh, Andrew Leventis, and Nayantara Hensel

Abstract:

This Brief provides historical, state-by-state statistics on the share of purchase-money mortgages for primary homes obtained by first-time homebuyers from 1996 to 2013. It also examines the relationship between first-time homebuyer activity and trends in house prices across states. Economic intuition suggests that increasing house prices could motivate potential first-time homebuyers to enter the market. However, rising house prices also suggests decreasing affordability, which affects the ability of first-time homebuyers to purchase a house when they are often just getting started professionally and still saving for a down payment. The Brief shows a weak negative relationship between changes in the relative first-time homebuyer activity and house price growth. That is, the first-time homebuyer share decreases as house price growth increases, or first-time homebuyer share increases as house price growth decreases. This relationship is very strong for certain states that saw the greatest house price swings in the last two decades. In high price-volatility states like California, Nevada, and Florida, first-time homebuyers have tended to account for a diminished share of mortgage borrowing when house price appreciation has been very high.

 

FHFA State-Level First-Time Homebuyer Share Excel Data (Excel)

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