RealEstateEconomyWatch.com

First-time home buyers fell to a 37 percent market share in the past year from a record high 50 percent in 2010 as down payments rose and buyers found getting a mortgage to be more difficult than in the past.

Recent home buyers are staying well within their means with notably higher incomes and modestly higher down payments than buyers in the previous year due to the restrictive mortgage credit environment, despite historically favorable housing affordability conditions, according to a study by the National Association of Realtors.

“Although last year’s findings were boosted by the home buyer tax credit, long-term survey averages show that four out of 10 buyers are typically first-time buyers. This segment is critical to a housing recovery because they help existing home owners sell and make a trade,” said NAR President Ron Phipps.

First-time buyers who financed their purchase used a variety of resources for the down payment: 79 percent tapped into savings, 26 percent received a gift from a friend or relative, typically from their parents, and 7 percent received a loan from a relative or friend. Nine percent sold stocks or bonds and 8 percent tapped into a 401(k) fund. Ninety-four percent of entry-level buyers chose a fixed-rate mortgage.

Fifty-four percent of first-time buyers financed with a low-down payment FHA mortgage, and 6 percent used the VA loan program which requires no down payment.

The median age of first-time buyers was 31 and the median income was $62,400, up from $59,900 in the 2010 study. The typical first-time buyer purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794. The typical repeat buyer was 53 years old and earned $96,600, notably higher than the $87,000 median reported in the 2010 profile. Repeat buyers purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006.

The median down payment for all home buyers was 11 percent, ranging from 5 percent for first-time buyers to 15 percent for repeat buyers. The down payment size for both repeat buyers and first-time buyers was a full percentage point higher than in the 2010 study, another indication of tighter lending requirements.

The median price paid by repeat buyers in the survey was 2.1 percent higher than in the 2010 study, but their income was 11.0 percent greater, despite lower interest rates. First-time buyers paid 1.9 percent more, but their income was 4.2 percent higher.