Higher rates on mortgages and home prices aren’t causing first-time buyers to back down yet. Those new to the home-purchase game comprised 32% of the market in November, up from a 30 % share a year ago, in accordance with the National Association of REALTORS®’ latest housing report.
First-Timers Don’t seem to be Backing Down Yet
Overall, this has been an excellent year for this segment of the population. NAR’s 2016 Profile of Home Buyers and Sellers, released in November, showed that the annual share of first-time buyers was 35 % in 2016, which is the highest since 2013 (38%).
Still, “first-time buyers in higher priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget or make compromises on home size, price, or location,” says Lawrence Yun, NAR’s chief economist. They’ll should be ready to face tighter inventories of homes for sale. Total housing inventory at the end of November was at 1.85 million existing homes available for sale, 9.3 percent lower than a year ago.
“Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017,” Yun says. “Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country.”
Consumers looking to buy in 2017 should seek preapproval from a lender and start their home search early, suggests NAR President William E. Brown.
“There are fewer available homes during the winter months but also fewer buyers,” says Brown. “With mortgage rates and prices expected to increase as the year goes on, the first few months of 2017 could be an opportune time close on a home.” ?
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