Millennial homebuyers continued to favor Midwestern states where home prices are comparatively more affordable, according to the latest Ellie Mae Millennial Tracker.
Purchase loans increased for the fourth consecutive month to 88% of Millennial closed loans in March, compared to 12% of refinance loans. And Millennials are increasingly buying these homes in the Midwest.
The most popular metropolitan area for homes purchased by Millennial buyers was Mount Vernon, Illinois. Other popular Midwestern cities included Hutchinson, Kansas, New Philadelphia-Dover, Ohio, Defiance, Ohio, Dickinson, North Dakota, Owosso, Michigan and Ashland, Ohio.
“What this data shows is where there is an inventory of affordable homes, the Millennial buyers are ready to enter the market,” said Joe Tyrrell, Ellie Mae executive vice president of corporate strategy. “We expect to see this trend continue as average FICO scores decline and affordable loan options become more available to Millennial homebuyers.”
The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a sampling of about 75% of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass, a mortgage management solution.
The average FICO score for Millennials slipped to 720 in March, down from 723 in February and 724 in January.
Conventional loans were the most popular among Millennials as 60% chose this option, compared to 36% who chose FHA, 2% who went with VA and 2% who had unspecified financing options to purchase a home.
Millennials are financing slightly less on homes as the average loan amount for purchases slipped to $181,154 in March, down from February’s annual high of $185,566.
The time to close all loans dropped to 43 days in March, don from 44 days in February. The time to close a purchase decreased from 42 days last month to 41 days, while time to close refinances decreased to 49 days, down from 52 days in February.
The average time to close FHA loans decreased from 43 days in February to 42 days in March. However, the time to close a VA loan increased to 51 days after February’s 17-day drop to 41 days.