A growing segment of the housing market—first-time home buyers—are contributing to an increase in demand for smaller and less expensive new homes, according to research from economists at the National Association of Home Builders (NAHB).
Delving into data from the most recent biennial American Housing Survey, which was conducted by the Department of Housing and Urban Development and the Census Bureau in 2009, the study, “Characteristics of New and First-Time Home Buyers,” finds that 41% of the 8.4 million households who bought a home between 2007 and 2009 were first-time buyers.
“Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households,” said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich.
“New homes are a better match for the needs of the population in general,” Jones said. “Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today’s lifestyles.”
The market share of first-timers was up from 35% in both 2005 and 2007. Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers—members of a generation that is larger than their parents’—move into their household formation years in the period ahead.
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