The U.S. housing market is expected to get a boost from first-time homebuyers in 2020, revealing that millennials want to buy a house, after all, according to one new analysis.
Favorable economic conditions will unleash 8.31 million to 9.2 million first-time homebuyers into the market in 2020 to 2022, up from 7.64 million in 2016 to 2018, according to a new TransUnion estimate released Tuesday. The bump in first-time homebuyers is greater than in any three-year period since the Great Recession.
“It is particularly good news, given that in 2018, the purchase market actually decreased. It’s a nice turnaround we’re expecting,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion.
“All these factors conspire to be a good picture for the market and for first-time homebuyers,” Mellman said, noting that 40% of prospective first-time homebuyers had delayed their purchase while looking for a more steady job, and 35% said high home prices had delayed their purchase.
Reasons to buy
Prospective homeowners said their top reasons for entering the market were the need for privacy and the opportunity to invest in their own equity, rather than pay rent each month, according to a TransUnion survey of 943 U.S. residents who have expressed interest in buying their first home over the next three years. Less than a quarter cited getting married or having a family as a top reason to buy a home.
“Over the past 10 years, there were a bunch of stories about how younger people aren’t interested in owning homes. Now we have results from consumers not currently owning a home, who are interested and planning on owning a home in the next few years.”
In fact, the average first-time homebuyer is getting younger, ticking down to an average age of 36 in 2018, compared to 39 in 2010, TransUnion found.
Analysts warned that a limited amount of available homes in the market could prevent people from buying their first home. The number of homes under $200,000 for sale have become scarce and on a decline since the beginning of 2014, while the number of available mid-priced homes, from $200,000 to $750,000, stalled this September for the first time in 18 months, according to Realtor.com.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
More from Sarah: