Although the share of adults mulling a home purchase fell during fourth-quarter of 2019, the share of potential first-time homebuyers rose considerably, according to the National Association of Home Builders (NAHB).
The share of adults considering a home purchase in the next 12 months was 11% in the past fourth quarter, down from 13% in fourth-quarter 2018. It’s the fifth consecutive quarter with a year-over-year drop — a trend that Rose Quint, assistant vice president for survey research at NAHB, said is likely fueled by low housing inventory. This share has dropped considerably since fourth-quarter 2017, when 24% of NAHB’s survey participants indicated that they were planning on buying a home within a year.
Among potential buyers, however, there was a distinctly larger share of would-be first-time buyers compared to the prior year. In fourth-quarter 2019, 63% of prospective buyers were first-timers, up 10 percentage points from the same period in 2018.
The first-time share among prospective buyers hovered around 60% for all of 2019. But the fourth quarter of last year represented the first time this share exceeded the 60% watermark in 2019.
Although millennials, at a 19% share of all prospective buyers, are the most likely generation to plan a home purchase in the next 12 months, members of Generation Z are beginning to make their presence felt in the homebuyer picture. Thirteen percent of prospective buyers belong to Generation Z, a larger percentage than Generation X (12%) or baby boomers (5%). Among the Gen Zers looking to buy a home, 88% are first-time buyers. That share drops to 78% for millennials as some of the older members of the cohort begin to look for their second or third homes.
Geographically, the percentage of prospective buyers who are first-timers is fairly consistent. Sixty-five percent of potential homebuyers in the Northeast regions would be buying their first home. In the South, West and Midwest regions, those shares are 64%, 62% and 61%, respectively.
