Despite the ongoing rise in mortgage interest rates, first-time homebuyers remain determined to achieve homeownership, according to a recent survey conducted by one of the nation's largest homebuilders, PulteGroup (NYSE: NYSE:PHM). The survey was released on Thursday and sought to understand the motivations and considerations of first-time homebuyers who purchased their homes within the past year amid rising mortgage rates.
The majority of respondents, 72%, cited the desire to stop renting or recognition that homeownership is a smart financial investment as their main motivation for purchasing their first home. Despite higher mortgage interest rates not deterring their purchase, 55% admitted that it did impact certain decisions. Among this group, 35% opted for a smaller home than initially planned, 27% included fewer options and upgrades, while 26% chose a different location.
In terms of financing, 95% of respondents used mortgage financing to purchase their homes. For down payments, 72% relied on savings while 10% utilized gifts from family members and 5% used government down payment assistance. Other sources cited by 11% of respondents included VA loans or borrowings against 401k savings.
"Overall value" was the primary reason for choosing new construction over resale for 75% of respondents, with only 5% attributing their decision to low resale inventory.
Matthew Koart, PulteGroup Executive Vice President and Chief Operating Officer, commented on the findings saying, "First-time homebuyers can be more severely impacted by higher mortgage rates, so ongoing strong demand among this buyer group has been a positive development as 2023 has progressed. This buyer group appreciates the financial benefits of homeownership and remains ready to buy."
The survey results were based on responses from 556 first-time homebuyers who closed on their home purchase within the previous 12 months. The survey was conducted over a three-week period in June and July.
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