Young buyers could return to the housing market in droves this spring, according to a report due to be released Wednesday.
First-time home buyers now make up 52% of prospective buyers looking to purchase in 2017, up from 33% a year earlier, according to an analysis of web searches performed by Realtor.com, a real-estate listing website.
Buyers typically begin searching several months in advance, so the jump in activity could translate to increased purchases by first-timers in the spring and summer of next year.
The absence of first-time buyers has been one of the biggest abnormalities of the housing market in recent years. If they return, it could provide a big boost to sales and serve as a sign that the housing market is returning to normal after years during which most new households being formed were apartment-dwellers.
“The first-time buyer is ready to come back,” said Jonathan Smoke,chief economist for Realtor.com.
Just because many more young people are searching for homes doesn’t mean they will be able to buy. A number of surveys have shown that millennials want to purchase homes but are being held back by their inability to save for a down payment as well as a general lack of affordable inventory and strict mortgage-lending standards.
Nonetheless, Mr. Smoke said he anticipates the share of first-time buyers could rise to 40% during the peak 2017 selling season. First-time buyers fell to 32% of all purchasers in 2015, the lowest level in three decades, according to the National Association of Realtors. Historically, young buyers have averaged 40% of all home buyers, according to the group.
Stronger job growth could be one major reason more young people are looking to buy homes. Nearly half of the new jobs created in the past year were filled by people ages 25 to 34 years old, the prime age for buying a first home, according to Mr. Smoke. Mortgage lenders have rolled out more programs allowing first-time buyers to purchase homes with lower down payments.
Nonetheless, some big obstacles remain. Chief among them: Builders are still constructing few homes affordable to younger buyers and inventory of existing starter homes remains tight.