Home sales to first-time homebuyers and other buyers using Federal Housing Administration (FHA) loans increased compared to a year ago in June, and reached a two-year high in the second quarter, according to RealtyTrac.
FHA-backed loans normally require low down-payments — as low as 3.5 percent instead of the standard 20 percent — but mortgage insurance fees are usually added.They are utilized by first-time homebuyers — and other buyers without equity to bring to the closing table. These loans accounted for 23 percent of all single family home and condo sales with financing — excluding all-cash sales — in the second quarter of 2015, up from 20 percent in the first quarter — and up from 19 percent in the second quarter of 2014 to the highest share since the first quarter of 2013, RealtyTrac said.
The rising tide of FHA loans comes as distressed sales, cash sales and institutional investor sales in June were all down from a year ago to multi-year lows.
“As the investor-driven housing recovery faded in the first half of 2015, first-time homebuyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack,” said Daren Blomquist, vice president at RealtyTrac. “This is good news for sellers in many markets, providing them with strong demand from a larger pool of buyers …”
This trend provides sellers in many markets stronger demand from a larger pool of buyers, he added.
U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007. In June sellers sold for above estimated market value on average for the first time in nearly two years, Blomquist said.
All-cash buyers accounted for 22.9 percent of all single family home and condo sales in June, down from 24.7 percent of all sales in the previous month and down from 29.1 percent of all sales in June 2014 to the lowest share of monthly cash sales nationwide since August 2008. The June cash sales share was almost half the peak of 42.1 percent in February 2011.