NEW YORK – May 12, 2017 – The number of new-owner households was double the number of new-renter households in the first quarter of this year, as the share of first-time buyers creeps back toward its historical average, and mortgages for first-timers rise.
In a shift, new households are overwhelmingly choosing to buy rather than rent.
Some 854,000 new-owner households were formed during the first three months of the year – more than double the 365,000 new-renter households formed during the period, according to Census Bureau data. It was the first time in a decade there were more new buyers than renters, according to an analysis by home-tracker Trulia.
Home builders are beginning to shift their focus away from luxury homes and toward homes at lower price points to cater to this burgeoning millennial clientele. In the first quarter of this year, 31 percent of the speculative homes built by major builders were smaller than 2,250 square feet, indicating they were in the starter-home range, according to housing-research firm Zelman & Associates. That’s up from 27 percent a year ago and 24 percent in the first quarter of 2015.
The return of first-time buyers is allaying fears that millennials might eschew homeownership permanently. But it also provides an infusion of new demand while housing supply is tight and home price growth is significantly outstripping wage gains.
Source: Wall Street Journal (05/12/17) Kusisto, Laura; Kirkham, Chris