First-Time Buyers Jump Into Housing Market

After a dismal year full of plummeting values and foreclosures, the U.S. housing market is seeing glimmers of hope. And the key element to the turnaround might be first-time buyers. They accounted for more than half the purchases in March.

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And even in the broader U.S. real estate market, there is a hint of hope provided by first-time buyers. Those moving from renting to buying accounted for more than half the home purchases in March. And they may prove to be the key element in the turnaround. NPR's Karen Grigsby Bates reports.

KAREN GRIGSBY BATES: The National Association of Realtors released a survey on Thursday that says while sales of existing U.S. homes slipped about 3 percent last month, first-time buyers are trending up. The reasons are multiple.

The association's chief economist, Lawrence Yun, says prices have fallen enough that people who couldn't afford to buy during the overheated, boom years now feel they can. Mortgage rates are attractive. And, Yun says, there's one more thing.

Mr. LAWRENCE YUN (National Association of Realtors): On top of that, there is a homebuyer tax credit of up to $8,000. Buy a home and get a tax break, so that's an added incentive.

BATES: Yun says it's incentive enough to push people who were waiting for the market to bottom out into the buyers' pool.

Mr. YUN: As soon as other people start entering the market, everyone wanted to enter at the same time and did not want to be left behind. And we are hearing common occurrences of multiple bidding on those low-priced homes.

BATES: Yun believes first-time buyers' purchases will help unfreeze the entire market. Sherry Chris, CEO of New Jersey-based Better Homes and Gardens Real Estate, says buyers aren't looking for the extravagant extras they once insisted on. The two-story great rooms, bathroom Jacuzzis and wine cellars that were often requests - even from first-time buyers - have been replaced with much more modest wants.

Ms. SHERRY CHRIS (CEO, Better Homes and Gardens Real Estate): I see people flocking to entry-level, starter homes that are affordable, where the people who are buying them know that even if one member of the family loses their job, they can still carry the mortgage on.

BATES: In other words, for first-time buyers, peace of mind is the new luxury must-have.

Karen Grigsby Bates, NPR News.

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