Prospective first-time home buyers are showing more interest in making purchases, despite rising prices and growing anxiety over affordability.
Google searches related to buying a first home jumped 11 percentage points to 44% of all home buying-related search activity in 2017 compared with a year earlier, according to a study of Google search data conducted by Chase Home Lending.
In all, first-time buyers accounted for 33% of all home sales in May, up from 30% a year earlier, according to the most recent data from the National Association of Realtors.
First-time buyers are critical to the market because they bring new demand, allowing homeowners to trade up and stimulating demand for builders to construct new homes.
Demand from millennials has been soft because of stagnant wage growth, student loans debt and wariness about the benefits of homeownership.
But so far this year, new purchasers accounted for 42% of all buying this year through April, up from 40% in 2016 and 31% during the lowest point during the recent housing cycle in 2011, according to the most recent data from Fannie Mae, which defines first-time buyers as anyone who hasn't owned a home in the last three years.
Some first-time buyers captured by the Fannie Mae data are older, including former spouses who downsize after a divorce or death or people who rented for a period after losing their homes to foreclosure.
But by another measure, young people in particular are getting more active in the housing market. Customers under the age of 35 made up 36% of Chase's mortgage origination volume in 2016, up 16 percentage points from the year before.
"I had assumed that we would start to see millennials come in in force in the next two years. They're already here and buying today," said Amy Bonitatibus, chief marketing officer at Chase Home Lending.
Still, affordability, which has been the biggest obstacle to buying a first home for young buyers, remains a critical stumbling block.
The number of searches about housing affordability increased 34% in 2016 compared with a year earlier. The top three mortgage-related questions asked on Google were variations on "How much mortgage can I afford?"
There are indications that while many young people are curious about homeownership they might continue renting for quite some time. Rental apartment searches accounted for 46% of home searches on Google in 2016. Searches for multi-unit accommodations were up 24% in 2016 from a year earlier and are up 9% so far in 2017.
Chase plans to unveil its report Friday.
Write to Laura Kusisto at firstname.lastname@example.org
(END) Dow Jones Newswires
July 14, 2017 08:14 ET (12:14 GMT)