First-time buyers find deals, help perk up house sales

The new face of today's home buyers: first-timers who are snapping up distressed homes and fixer-uppers that are being sold at bargain prices.

Up to 45% of homes being purchased today are in that category, according to an April report by the National Association of Realtors (NAR) — and that's a major force driving existing home sales। First-time buyers accounted for more than half of all home sales in March, with activity concentrated in lower price ranges. But there is a troublesome side, because sales of foreclosed and other distressed homes tend to drag down overall home prices across the USA. These properties typically sell for 20% less than traditional homes.

Economists tracking the beleaguered housing market say these first-time home buyers represent a critical demographic that could help lead the industry out of its doldrums by buying up much of the excess inventory of homes that is drawing down home values nationwide. And in one promising sign, the inventory of unsold homes is starting to shrink. Total housing inventory at the end of March fell 1.6% to 3.74 million existing homes for sale, which represents a 9.8-month supply at the current sales pace, compared with a 9.7-month supply in February.