Home buying demand has rebounded in recent weeks, though first-time buyers make up only a small share of mortgage applicants as dwindling supply leaves few affordable options on the market. First-time buyers not only face a shortage of around 5.2 million homes, according to Realtor.com, but they also struggle to compete with repeat buyers backed by equity from previous homeownership.
Mortgage rates have also risen from ultra-lows at the start of 2021 and economists expect them to continue rising into the new year, further extending obstacles for first time buyers after a year of limited market affordability.
There’s been a rebound in home-buying demand in recent weeks, as evidenced by mortgage application data. But first-time buyers aren’t behind the surge.
The latest data from the Mortgage Bankers Association, for the week ending Nov. 26, showed that overall mortgage applications dropped 7.2% on a weekly basis. But loan applications for mortgages meant to purchase homes increased by 5.1% week-over-week, building on the previous week’s 4.7% uptick.
Overall, in November, mortgage applications for loans intended for purchasing homes increased by 7% in November, according to an analysis from Joshua Shapiro, chief U.S. economist at MFR Inc. That’s compared with a 1% decline in October and an 8% gain in September. But when diving deeper into the data, it’s clear that not all buyers are flocking back to the market in similar numbers.