Although they aren’t totally back in the game yet, first-time buyers are claiming a larger share of the housing market. Builders, realtors, and market analysts at last week’s Homebuilding & Building Products Conference in New York commented on the uptick in new buyer activity nationwide. Although first-time buyers aren’t yet fully in the game, they are certainly stepping off the bench and onto the field.

This is welcome news. Economists have long cited the return of first-time buyers as a necessary precursor to economic recovery. The 437,000 new homes sold last year totaled only 58.6 percent of the annual average since 2000. The slow return of first-time buyers after nearly a decade of dormancy will boost home construction volume and market revenues. Executives from Meritage and Ryland offered key insights about this trend.

Volume builder Meritage announced plans to build starter homes in the low 200,000’s to cater to this emerging demographic. Although they typically cater to high-end buyers, hey have clearly taken notice of D.R. Horton’s wildly successful Express line of entry-level homes. Steven Hilton, Chief Executive with Meritage, told conference goes last week that, “We do see this as an expanding market,” adding that, “we saw strong demand in that segment in the last quarter and even more so over the last two months.” Meritage is absolutely not abandoning its higher-end upgrade buyer, but rather fostering long-term relationships with first-time buyers who will eventually also buy their upgrade homes from Meritage.

Ryland Group CEO Larry Nicholson echoed Hilton’s sentiment, “We hear from the field that the entry-level buyer is back out trying to figure out what they have to do to buy a house.” Nicholson says that new buyers “realize that money isn’t going to get any cheaper, that pricing is not going to get any cheaper. And they’re comfortable that their job situation is stable.” Upon review of the 7,677 homes they sold last year, Ryland projects that entry-level buyers in the coming year will account for 40 percent of Ryland’s total home sales. Entry-level buyers currently account for 33 percent of Ryland’s sales.

First-time buyer re-entry to the market has been hampered by several factors, resulting in a gradual trickle of would-be homeowners. While wages and employment rates have risen of late, the increase is still too recent and insubstantial to bankroll a mortgage. Crippling levels of student debt averaging $27,000 only make the issue more challenging. Home prices are still too still for new buyers to swing the 10 percent to 20 percent down payment on a new home. Mortgage lending criteria are still pretty stiff for first time buyers challenged by limited credit histories, even as the median home price hit an all-time high of $302,700. The good news is that the percentage of new home buyers will account for 18% of new home sales this year, an increase of 2% over last year.