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For First-Time Buyers, Starter Home Supply Has Shifted from Owner- to Rental-Occupancy
Monday, October 24, 2016 6:25 AM

Subdued first-time home buying has slowed the housing recovery. Both supply side and demand factors have suppressed purchases by would-be first-time home buyers. But as the labor market has continued to heal and as young-adult incomes have begun to recover, much attention has focused on supply side constraints. Tight mortgage credit is often cited as an obstacle - but a low inventory of for-sale starter homes seems to be a major player in preventing the return of the first-time buyer.

In a new edition of Housing Insights, Fannie Mae's Economic & Strategic Research Group examines a key contributor to the recent shortage of starter homes: the shift in the nation's single-family housing stock from owner-occupancy to rental properties during the housing bust and recovery. The brief paper analyzes net changes since the onset of the housing downturn in the number of starter homes that are owner- and renter-occupied, and examines how tight supply and rapid price gains in the lower tiers of the market are reducing first-time buyer affordability.

Read the Housing Insights and hear from author Patrick Simmons in his related FM Commentary.