By Staff

(AXcess News) Washington - According to a recent trade group survey, the number of first-time homebuyers in the US this year have reached record levels due to the tax-credit program which was recently extended by Congress.

The 2009 National Association of Realtors (NAR) Profile of Home Buyers and Sellers Survey shows that the number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year's study, and was the highest on record dating back to 1981.  The previous high was 44 percent in 1991.

NAR Vice President of Research Paul Bishop said, "It's interesting to note the last cyclical peak of first-time home buyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession."

"Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time home buyers into the market," Bishop said. "These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up - they absorb inventory, free existing owners to make a trade and stimulate related goods and services."

The profile shows the median age of first-time buyers was 30 and the median income was $61,600.  The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study, and plans to stay in that home for 10 years.

Fifty-five percent of entry level buyers reported they financed their purchase with an FHA loan, while another 8 percent used the VA loan program.

First-time buyers who made a downpayment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents.  Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.  Ninety-six percent chose a fixed-rate mortgage.

First-time buyers often make financial sacrifices to purchase a home: 39 percent cut spending on luxury items, 38 percent cut back on entertainment and 30 percent cut spending on clothes. 

Only 12 percent said financing their first home was more difficult than expected, but 13 percent of successful buyers said they had experienced a purchase agreement that was canceled, terminated or fell through; and 8 percent had been rejected by a lender.  "This raises the question of how many potential buyers were unsuccessful because of problems with appraisals or loan qualifications," Bishop said.  "The market would be even stronger without these problems."