It’s Official: First-Time Home Buyers Held Back in 2014

REAL ESTATE TOPICS

• By
 
• KATE DAVIDSON

Mounting student debt, higher rents and tight credit conditions continue to make it tough for first-time borrowers to save enough money for a down payment and qualify for a mortgage.

 

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First-time buyers purchased nearly one-third of previously owned homes sold in 2014–the same share as 2013, according to a report released Friday by the National Association of Realtors.

That’s the lowest share, 29%, since NAR began tracking the data in 2008, saidLawrence Yun, the Realtors’ chief economist. It was down from 31% in November but up from 27% a year ago, NAR said.

Mounting student debt, higher rents and tight credit conditions continue to make it tough for first-time borrowers to save enough money for a down payment and qualify for a mortgage.

Another measure of first-home home buyers from NAR that surveys recent buyersfound the annual share had fallen to its lowest level in nearly three decades.

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Mr. Yun said the improving economy and policy changes intended to make mortgages more accessible to first-time borrowers could entice buyers to enter the market in 2015.

But they may find homes are less affordable in the months ahead. Total housing inventory dropped 11.1% in November, raising some concerns that lower selection and potentially faster price appreciation could offset overall demand from buyers encouraged by a stronger economy, Yun said.

“The still-tight mortgage credit conditions and more challenging first-time home buyer affordability that were revealed by the failure of home sales to continue recovering last year remain a serious concerns as we head into 2015,” Morgan Stanley economistTed Wieseman said in a note to clients Friday.