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- As of July 2024, first-time home buyers (FTHBs) made up about 37% of the market, holding steady from last year. Back in 2020, their share jumped to 39%, up from around 35% in 2019. But in the third quarter of 2022, their share dropped to 34%, hitting a three-year low because mortgage rates shot up to the highest level in nearly 25 years. Since then, the share of FTHB mortgage applications has been climbing again, mainly because there are fewer move-up buyers. Homeowners are sticking with their super low mortgage rates, so they’re not moving as much.
- Loan-to-value (LTV) ratios have been dropping for both first-time homebuyers (FTHBs) and repeat buyers over the past few years. In 2024 (from January to July), the average LTV ratio was 89% for FTHBs and 79% for repeat buyers, both down 2 percentage points from 2019. On the flip side, average debt-to-income (DTI) ratios have been climbing due to skyrocketing home prices. However, in 2024, the average DTI ratio for FTHBs dipped a bit, while it stayed the same for repeat buyers.
- The share of piggybacked FHA purchase loans jumped by over 7 percentage points, from 10.8% to 18% between June 2022 and June 2024. For conventional loans, the percentage of piggybacked loans went up from 2.2% in June 2022 to 3.6% by June 2024. More homebuyers are turning to second mortgages to afford homes as low housing affordability continues to be a challenge, especially for first-time buyers and those with tighter budgets.
- In July, home sales bounced back from a big drop in June, with a 1.7% increase compared to last July. Pending sales in July were also 3% higher than last year, hinting at a slight uptick in sales for 2024 compared to last year.
- Active inventory is steadily growing. In July, it was about 15% higher than in 2023. Newly available weekly listings were also up 6% year-over-year in July, continuing to trend above 2023 levels. The months of supply of unsold listings is now at 2.9 months.
- There are still more buyers than sellers in many markets, which is keeping home prices on the rise. The median list price and median sold price both went up by 10% year-over-year in July. About 31% of homes sold in July went for above the listed price. While this is down from the pandemic highs of 52% in 2021 and 35% in 2022, it’s still above the 2015-2019 average of 21%.
- People are starting to move back into bigger homes. The average living area of a home bought in July increased to 1,885 square feet, up 2% from both July 2023 and July 2022, matching the level seen in 2021. However, this is still 2% below the 2020 number. The shift to smaller homes was driven by affordability concerns, but the recent trend might reflect more purchases by higher-income households and more sales in markets with larger homes, like the South and Southeast.
- Investors are pulling back from flipping homes. Core Logic’s data shows that only 12% of homes bought by investors in December 2023 were resold by June 2024, which is lower than the historical December average of 17%. Slower home price appreciation, buyer uncertainty, and high unaffordability have made flipping less attractive.
- The share of mortgages in delinquency rose to 3% in June, the highest rate since December 2023. This increase was mainly due to more mortgages being one month behind. The rise was widespread, with 97% of metropolitan areas seeing an increase. However, a 3% delinquency rate is still low by historical standards. For comparison, the rate was 4% in June 2019 and 12% during the peak of the Great Recession in the mid-2000s.
- Nearly all borrowers (92%) currently have a mortgage rate below 6.5%. Most borrowers with rates above 6.5% got their loans in the last two years and are likely to refinance as rates drop. The weighted average outstanding mortgage rate is 3.93%, the highest in four years, and the gap between the outstanding mortgage rate and the current 30-year mortgage rate has shrunk to 2.9 percentage points from a high of 3.9 percentage points.