Economists' Outlook

Housing stats and analysis from NAR's research experts.

Sales to First-Time Buyers: 33 Percent of Sales in June 2016

First-time homebuyers appear to be getting back into the market more strongly with interest rates moving down to new lows. First-time buyers accounted for 33 percent of residential sales in June 2016, up from the 30 percent share in May 2016 and one year ago (Chart 1), according to the June 2016 REALTORS® Confidence Index Survey Report ().1

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The average contract rate on 30-year conventional mortgages has stayed below four percent since 2015 (except in July 2015), down to an average of 3.57 percent in June 2016 (Chart 2). The last time 30-year rates fell below four percent was in 2012 through the middle of 2013. Mortgage rates are an important consideration in deciding when to purchase a home, especially among first-time homebuyers. In 2015, 95 percent of first-time homebuyers obtained  mortgage financing and typically financed  94 percent of the purchase price.[2]

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Despite the favorable interest rate environment, potential buyers are facing a challenge, with home prices rising faster than income growth, mainly because supply has not kept pace with demand (Chart 3). The low interest rate environment is lowering the monthly mortgage payment, but rising prices are also making it more difficult to save for a downpayment. As of May 2016, the median family income is up by 11 percent compared to the level in January 2012, while the median price of an existing-home is up by 56 percent over this same period.[3]

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The approval of H.R. 3700, the “Housing Opportunity Through Modernization Act of 2016” by both the House of Representatives and the Senate is expected to help first-time buyers by increasing the access to FHA condominium financing. The new law addresses a number of restrictive conditions that have restricted access to condominium financing related to owner-occupancy requirements, the condominium re-certification process, mixed-use buildings, and private transfer fees.[4] Under the new regulation, condominiums that are 35 percent owner occupied are eligible for FHA-insured financing, a lower barrier than the current requirement of 50 percent.


[1] First-time buyers accounted for about 32 percent of all home buyers based on data from NAR’s 2015 Profile of Home Buyers and Sellers (HBS). The HBS is a survey of primary residence home buyers and does not capture investor purchases but does cover both existing and new home sales. The RCI Survey is a survey of REALTORS® about their transactions and captures purchases for investment purposes and second homes for existing homes.

[2] National Association of REALTORS® 2015 Profile of Homebuyers and Sellers

[3] NAR data used in calculating the Home Affordability Index.

[4]The bill, which was championed by NAR, passed  the House of Representatives 427-0 and the Senate under unanimous consent on July 14, 2016. The bill is on the way for the President’s signing. See http://www.realtor.org/articles/hr-3700-heading-to-president

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