The portion of home purchasers who are first time buyers dropped to 33 percent for the 12 months through June, the lowest since 1987, and down from 38 percent a year earlier, according to a survey by the National Association of Realtors.
The average since 1981 is 40 percent.
"Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce," Lawrence Yun, the NAR's chief economist,
said in a statement.
Average hourly wages for all workers rose only 2 percent in the 12 months through September.
"Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums," Yun said.
"Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation."
But don't overreact to the data.
"The share of first-time buyers [also] didn’t increase during the housing bubble, when it was too easy to get a mortgage,"
notes Wall Street Journal reporter Nick Timiraos.
"That’s because home prices were rising. The share of first-time buyers fell to 36 percent in 2006, at the peak of the bubble, from 40 percent in the prior three years."
Meanwhile, the housing market has showed some signs of weakness in recent months. The S&P/Case Shiller 20-city composite home price index fell a seasonally adjusted 0.5 percent in July, the third straight month of decline.
"While the residential real estate market has definitely gotten better, which is good for the U.S. economy, it has not fully recovered," Wells Fargo CEO John Stumpf said on an earnings call this week,
Bloomberg reports.
"I believe there are several factors holding the housing market back from a complete recovery," such as sluggish household formation, high student debt levels, low inventories and tight credit conditions, he said.
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