Much has been written about the economic and housing difficulties many young adults have endured in the decade since the Great Recession.
Whether it's sluggish wage growth, repaying student debt, low entry-level housing supply or the steady, multi–year rise in rents and home prices, the financial wherewithal to become a new homeowner in recent years has unfortunately been just a pipe dream for too many would–be first–time buyers.
The good news? It appears the tide could finally be turning, even as prices this year continue to climb and mortgage rates have moved up from 3.95 percent at the start of the year to 4.55 percent (as of June 28).
According to Freddie Mac's first quarter mortgage data, first–time buyers represented 46 percent of its purchased loans, the largest share in recent history and up from 42 percent a year ago.
What's fueling the increase? Freddie Mac Chief Economist Sam Khater recently told Bloomberg News that the sheer size of the millennial generation, along with the robust job market and millennials doing “adulting” things like getting married and having babies, are leading to more sales to first–timers.
Looking ahead, there are reasons to be optimistic that more young adults will be diving into homeownership. The job market and economy continue to look healthy, there's substantial pent–up demand for increased household formation, and more millennials will enter the peak age of settling down, getting married and deciding to start a family – all indicators of stronger demand for home purchases.
However, as Khater noted in last month's forecast, higher prices and mortgage rates pose as headwinds for the overall housing market, as do the stubbornly low supply levels that have led to slim pickings for home shoppers in most of the country in 2018.
While inventory conditions are expected to remain tight in the coming months, those thinking about buying their first home are fortunately seeing improved prospects when it comes to getting a mortgage.
Whether it's through low down payment programs like Home Possible® and HomeOne® (available later this month), or recognizing the creditworthiness of those self–employed, Freddie Mac is committed to reimaging the mortgage experience through responsible lending, improving access to credit and sustainable homeownership.