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How COVID-19 Affected First-Time Homebuyers

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Abstract

Efforts in the spring of 2020 to contain the spread of COVID-19 resulted in a sharp contraction in U.S. economic growth and an unprecedented, rapid rise in unemployment. While the first wave of the pandemic slowed the spring housing market, home sales rebounded sharply over the rest of the year, with strong gains in house prices. Given the rising house prices and continuing high unemployment, concerns arose that COVID-19 may have negatively affected first-time homebuyers. Using a new and more accurate measure of first-time homebuyers, we find that these buyers have not been adversely affected by the pandemic. At the same time, gains from lower mortgage rates have gone to existing homeowners and not to households purchasing their first home.

Suggested Citation

  • Donghoon Lee & Joseph Tracy, 2021. "How COVID-19 Affected First-Time Homebuyers," Liberty Street Economics 20210412, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:90806
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    More about this item

    Keywords

    first-time home buyers; mortgage; pandemic; COVID-19;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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