The strong housing market we experienced this summer may have been driven more by current homeowners buying additional properties than first-time homebuyers, the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey suggests. But a recent report from the American Enterprise Institute (AEI) offers the conflicting view that first-time buyers have been gaining market share for several months.

  • The strong housing market we experienced this summer may have been driven more by current homeowners buying additional properties than first-time homebuyers.
  • The market share for current homebuyers surged in the summer while the first-time homebuyer share declined.
  • In addition, the investor share of home purchases has also fallen from 18.7 percent in March to 14.4 percent in August.

The strong housing market we experienced this summer may have been driven more by current homeowners buying additional properties than first-time homebuyers, the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey suggests.

But a recent report from the American Enterprise Institute (AEI) offers the conflicting view that first-time buyers have been gaining market share for several months.

According to the Campbell survey, the market share for current homebuyers surged in the summer while the first-time homebuyer share declined. Current homeowners accounted for 49.3 percent of purchases in August, based on a three-month moving average after hitting a 12-month low of 44.9 percent in March.

The first-time homebuyer share hit 38.3 percent in May, the highest level seen since 2010, but higher home prices and seasonal patterns combined to push the first-time buyer share down to 36.4 percent in August, the survey said.

In addition, the investor share of home purchases has also fallen from 18.7 percent in March to 14.4 percent in August.

“Current homeowner purchases are supporting the housing market,” said Tom Popik, research director for Campbell Surveys, who defined “current homeowner” as those who buy another primary residence, not second homes or investment properties.

“Metrics such as the sales-to-list price ratio show a strong housing market, particularly in Western states,” Popik said. “Nonetheless, forward-looking commentary from real estate agents may indicate some softening in the future.”

A recent report from AEI suggests differently, however. According to AEI’s First-Time Buyer Mortgage Share Index, in August, first-time buyers accounted for 56.9 percent of primary owner-occupied home purchase mortgages with a government guarantee, an increase of 2.4 percentage points above the August 2014 share of 54.5 percent.

Agency-FBMSI

AEI noted that through March, the first-time buyer share had displayed no clear trend apart from seasonal variation, but since April, the share has pushed above the year-earlier levels, supported by improvements in the labor market, riskier mortgage lending and continuing low mortgage rates.

“The strong spring 2015 homebuying season has been paced by outsized gains for first-time buyers.” – Edward Pinto, co-director of American Enterprise Institute’s International Center on Housing Risk

“The strong spring 2015 homebuying season has been paced by outsized gains for first-time buyers.” said Edward Pinto, co-director of AEI’s International Center on Housing Risk. “Unfortunately, these gains are fueled in part by liberalized credit standards, which is creating demand pressure and driving real home prices higher. This will lead to future instability.”

The disparate views on first-time homebuyers may depend on how the analyzing entity defines first-time homebuyer. Most federal agencies define it as someone who owned a home more than three years ago, but not in the past three years.

Email Amy Swinderman.

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