By Daily Mail (U.S.) | Created at 2024-10-30 06:06:32 | Updated at 2024-10-30 13:18:35
7 hours ago
Rhode Island has emerged as the top state for first-time homebuyers, according to Freddie Mac's latest market outlook.
The state recorded a 14.3 percent surge in the share of mortgages going to first-time buyers since 2019 - the highest increase nationwide.
The trend is surprising, given the state's high housing prices. In September, Rhode Island's median home listing hit $569,950, well above the national median of $425,000.
However, with just 1,465 active listings last month, the state's small market magnifies the impact of first-time buyer activity.
Rhode Island leads the nation in first-time homebuyer activity, with a 14.3 percent increase in the share of mortgages going to first-time buyers since 2019, according to Freddie Mac
Change in the share of first time buyers from 2019 to 2024
Freddie Mac's monthly report for October also reveals that the share of mortgages going to first-time buyers across the nation has surged - from around 20 percent in 2004 to more than half this year.
Experts credit this to a wave of millennials hitting prime home-buying age and fewer transactions by those who already own a home.
Many of these are locked into lower rates before the surge in mortgage costs since the pandemic. As a result, they have stayed put rather than moved home until mortgage rates fall.
Meredith Whitney, dubbed the Wall Street 'Oracle', said in August that the mortgage rate needs to fall below five percent to really kickstart the housing market- and get those locked into cheaper deals to consider moving.
Meanwhile, Freddie Mac's report shows that first-time buyers are making the biggest strides in the Northeast and Midwest, where slower markets push prices down.
Other than Rhode Island, states with the biggest jumps in first time buyers include Iowa (+12.4 percent), Nebraska (+11.3 percent), Wisconsin (+10.9 percent), and Connecticut (+10.8 percent).
In contrast, retirement hotspots like Arizona and Florida have seen slower growth in first-time buyer participation, as retirees and older buyers dominate home purchases and push prices up.
Only two states - Louisiana and North Dakota - have reported declines in first-time buyer activity over the last five years.
Freddie Mac's report highlights several challenges facing these buyers. Entry-level home prices have surged 63 percent more than high-end properties since 2000, intensifying affordability issues.
Meanwhile, the ongoing housing shortage, rooted in a slowdown in new construction after the 2008 financial crisis, has left the US short by at least 1.5 million homes.
Despite an uptick in construction, it hasn't been enough to meet demand, leaving many aspiring buyers struggling to enter the market.
The report emphasizes the steep competition, with around 30 renters for every home currently available for sale.
'Less affordable housing is acutely felt by those seeking to buy their first homes, especially those without substantial wealth at their disposal,' Freddie Mac's report says.
A separate report in August named the top markets for first-time buyers - and half were in the Midwest,
St Louis has been named as the prime destination for Americans hunting for their first home
St Louis was named best overall, where buyers will see their dollars will go further and there is a wide availability of affordable homes.
Of the top ten markets named in the new analysis from homes selling site Zillow, half are in the Midwest - including Detroit, Minneapolis, Indianapolis and Kansas City.
First-time buyers accounted for half of all home buyers last year, according to Zillow - the highest share since at least 2017.
High mortgage rates last year meant that many homeowners were incentivized to stay put because of the low rate on their current mortgage - which kept some would-be repeat buyers on the sidelines.
