Big news for the housing market: first-time buyers coming back

This week's data on existing home sales had a couple tidbits that could be very good news for the housing market for the immediate future.

First, investors & cash buyers aren't as prominent in the market as they have been over the past few years.  Investor purchases were down to 14% (from 16%) and cash sales were down to 24% (from 32%).  This means owner-occupants are having an easier time getting a mortgage.

The biggest news, however, is that first-time homebuyers represented 32% of sales last year, up from 27% the year before.  This is potentially a big deal, for a couple reasons:

• The last time we saw a bump in first-time buyers like this was the tax incentive passed in the Recovery Act after the 2008 crash.  This bump is not tax-driven, but purely organic.
• The historical average of of first-time buyers in the market is 40%, so 32% is still below that, suggesting we could continue to see increases in first-time buyer activity.

The combination of more willing/able first-time buyers with relaxed lending standards could make for a very robust & healthy market for the long haul.