Millennials more optimistic about home buying

U.S. millennials are becoming more optimistic about home ownership and may gain market share in the latter half of the year, according to new data from realtor.com.

“Despite the slow indicators we saw earlier this year, 2015 is on pace to be one of the best years for housing since 2006 due to strong sales and higher-than-predicted home prices,” realtor.com chief economist Jonathan Smoke said at a panel discussion at the National Association of Real Estate Editors conference in Miami. “Additionally, we’re observing an uptick in millennial traffic and sentiment that we expect will result in more first-time home buyer sales in the later part of the year.”

First-time home buyers are vital to a healthy housing market, Smoke said.

“Historically, they’re the largest demographic of home buyers, and can have a dramatic impact on housing,” he said.

According to the realtor.com survey, the percentage of millennials who intend to buy a home in the next three months is on the rise. In June, 65% of 25- to 34-year-olds surveyed said they intended to buy a home within three months, a 54% spike from January. Older millennials and first-time buyers are also more optimistic, being more likely than the average buyer to say that they are “very likely to purchase within the next 12 months,” according to the survey.

“Last year, first-time buyer market share decreased as the year progressed and dropped all the way to 27% in the summer, according to data from the National Association of Realtors,” Smoke said. “This year, we’re seeing an increase in millennial demand that points to a strengthening first-time buyer demographic. As the economy continues to grow over the next few years, we can expect first-timers to return to a healthy level of 40% of the market. A return to that level would add approximately 15% to the number of total homes sold.”

MPA