First-time homebuyers have been struggling through the housing market in recent years. Many challenges have locked them out, creating little opportunity for these buyers to take the steps they need to begin building wealth and equity. The major thing industry economists recently said would need to change for first-time buyers to jump into the market is affordability, meaning that those first-time buyer mortgage offers with lower down payments need to be more accessible.
With that in mind, just how many buyers were able to break through the market challenges and access mortgage offers to be able to buy their first home?
A new report from LendingTree took a nationwide analysis of mortgage offers given to users of the LendingTree platform from Jan. 1 through Dec. 31, 2023 to determine how many offers went to first time buyers.
The report found that 65.25% of mortgage offers went to those who identified as first-time homebuyers. In addition, first-time buyers accounted for more than half of all offers in every state.
A look at the states with the highest shares of first-time homebuyer mortgage offers:
- New York at a share of 77.3%
- California at 73.15%
- New Jersey at 72.22%
- Massachusetts at 70.3%
- Rhode Island at 67.93%
- Wisconsin at 67.57%
- Oregon at 66.83%
- Hawaii at 66.76%
- Washington at 66.62%
- North Dakota at 66.18%
And states with the lowest shares:
- South Dakota at a share of 54.29%
- Alaska at 54.38%
- Arkansas at 56.19%
- Iowa at 57.19%
- Wyoming at 57.8%
- Mississippi at 57.97%
- Oklahoma at 58.13%
- Alabama at 58.13%
- Missouri at 58.13%
- Montana at 59.34%
Major takeaway:
“In the face of high mortgage rates, 2023’s housing market was extremely sluggish. While some were still house hunting, homebuyers were relatively few and far between, and mortgage demand was at its lowest point in more than 20 years,” commented Jacob Channel, LendingTree’s senior economist and author of the report.
“This provides context for why first-time buyers received such a large share of mortgage offers on the LendingTree platform last year. Unlike repeat buyers, first-time buyers aren’t generally at risk of feeling “trapped” in their current homes due to low locked-in mortgage rates. First-timers may be more likely than repeat buyers to venture into a high-rate housing market, as they don’t have to worry about sacrificing older, more attractive rates on their current mortgages,” continued Channel. “It’s also worth pointing out that even though newcomers made up a large share of buyers, 2023’s market wasn’t necessarily flooded by massive numbers of them. First-time buyers were likely more comfortable seeking new mortgages, making them a bigger part of a smaller pool of buyers.”
Channel concluded, “Nonetheless, our data is clear that first-timers were a major force to be reckoned with in 2023. As long as rates remain elevated, first-timers will likely continue to play a dominant role in 2024.”
For the full report, click here.
