The dislocation was even greater for the repeat buyers’ market, which fell by 34%, in part, because repeat buyers faced greater hurdles in selling their existing homes. The COVID-19 pandemic has resulted in tighter credit availability in the housing market, which led to a sharp contraction in first-time homebuyers with riskier credit profiles or relying on mortgages not backed by Fannie Mae and Freddie Mac.

The number of first-time homebuyers taking out FHA loans decreased by 36% in April, and the market for jumbo loans decreased by 50%. The number of first-time homebuyers using other products have seen smaller declines in April. For example, the number of first-time homebuyers using mortgage insurance decreased only by 18% in April, and those using VA loans decreased by 23%.

As the economy re-opened in May, the first-time homebuyer market rebounded by 27%. The repeat buyers’ market rebounded by 37% in May as existing homeowners came back to the market. The number of first-time homebuyers rebounded across all mortgage products, with jumbo loan borrowers up 41%, FHA loan borrowers up 29% and low down payment conventional loan borrowers up 24%.

“The COVID-19 pandemic pushed the U.S. economy into the sharpest recession on record in March,” said Tian Liu, chief economist at Genworth Mortgage Insurance. “The housing market corrected in April, with first-time homebuyer activities down almost 30% in just one month. However, what followed was a quick rebound in May of almost the same magnitude. This is not what we typically see in a normal recession.”