Young Home Buyers Return in U.S. as Economy Accelerates

Improvements in the economy are giving a boost to consumer confidence and spurring young renters to make home purchases. Fannie Mae chief economist Doug Duncan says, “Credit tightness has been an issue for the housing market but demand weakness has been a bigger one. The improving economy is going to put renters in a better place to buy.” Purchase mortgages fell 9.6 percent last year, but Duncan believes volume will rise 6.3 percent in 2015, as home sales are expected to improve due to greater confidence in the job market. According to the Thomson Reuters/University of Michigan consumer sentiment poll, Americans said last month that they anticipate income gains of 1.7 percent this year, with an increase of 4.7 percent expected by those under age 45. “More [young renters] are going to be willing to put down roots if they feel more comfortable in the labor market,” remarks Duncan. He also expects home sales to rise 5.4 percent to 5.7 million in 2015, following a 2.7 percent drop last year. Meanwhile, IHS Global Insight Inc. predicts that household formation will hit a three-year high of 1.1 million this year. The National Association of Realtors reports that 29 percent of home purchases from January through November 2014 involved first-time buyers. | Read More