Today’s show is an unusual show in that we are quoting national statistics. As you know, I don’t love national numbers because they reflect averages and the average often doesn’t apply in specific areas.
When we look at demand for homes, and for rentals, there are historic norms that are based on demographics and employment that most market analysts use to predict demand for housing. This feeds into well understood models for household formation, the age at which people start having children, and the time when they purchase their first home.
Recent studies are showing that the high cost of housing, combined with higher interest rates rates are reducing the number of new homes being sold to first time buyers across the US.
The Mortgage Bankers Association published a new report earlier this week that outlines some startling statistics for single family home sales. We’re going to look at these numbers and then infer what the implications might be for property investors, specifically in the apartment space and in the built to rent segment.
Historically, first time home buyers have accounted for an average of 36% of home purchase transactions over the past 20 years. For 2024, this proportion fell to an all time low of 24% of purchases.
First homes are being purchased nearly a decade later than historic norms.
All of the major national home builders are reporting a slowdown in home sales and an acute slowdown in first time home buyers. Pulte homes, the nation’s third largest home builder reported an 11% decline in first time home sales.
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