With record low interest rates and affordable prices, this was to be the year of the first-time home buyer. Instead, first-timers’ market share has fallen from 39 percent of existing home sales last year to 31 percent in October. What happened?

Asked the Wall Street Journal last May: “It’s been a scary few years for the housing market. But at some point, the nightmare has to end (please?). Is now the time? Should first-time home buyers consider jumping into the market?”

As the year winds down, the answer to those questions, unfortunately, is a resounding no. First-time buyers, who accounted for as much as half of all existing homes purchased at the height of the federal tax credit in 2009 and norm ally account for 40 percent of all sales now have nearly reached the record low of 28 percent recorded in January 2011 when sales plummeted following the expiration of the credit.

Yet these days sales are up while first-timer market share is down. The National Association of Realtors reported September sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from 4.69 million in September, and are 10.9 percent above the 4.32 million-unit level in October 2011.

Investors with deep pockets of cash received a lot of the blame for the tough times many first-timers faced this year, by out-competing them for declining numbers of foreclosures and short sales. Yet NAR’s numbers don’t indicate that investors have not gained at the expense of first time buyers. In October, investors purchased 20 percent of existing homes, up from 18 percent in September; they were 18 percent in October 2011. In fact, investor market share is also at low ebb; last year NAR credited investors with 29 percent of all home purchases.

The vast majority of first-time buyers se financing and fingers have pointed at lenders for the problems that buyers have been having getting financing, but conditions may be improving for borrowers with good credit. Lending standards were tightened dramatically in the years following the housing boom, but very few banks have raised standards since 2010, according to the Federal Reserve’s quarterly Senior Loan Officer Survey. Yesterday Ellie Mae reported that 61.2 percent of purchase loan applications closed in October, the sixth straight month that the closing rate has improved, up from 55.2 percent in April. Moreover, Ellie Mae, which processes 20 percent of all originations, reported that October FHA purchase loans, which are popular with first-time buyers, have a lower average FICO score (700) than all purchase loans (750) and conventional purchase loans (762).

However, FHA’s financial problems have made them more expensive for borrowers and unavailable to hose with marginal credit. Mortgage insurance premiums rose this year and will rise again in January (See FHA Audit Leads to Higher Fees).

Down payments, which rose significantly following the housing crash, are also a barrier to first-time buyers. The days of “no down” loans are over but after rising in 2007 through 2010, down payments actually have declined. The median downpayment made by all homebuyers in 2012 was 9 percent, ranging from 4 percent for first-time buyers to 13 percent for repeat buyers. The median down payment was the lowest since 2009 but still far above the levels during the housing boom, when nearly half of first-time buyers made no downpayment at all. Moreover, dozens of downpayment assistance programs sponsored by state and local housing authorities that provide grants and low interest loans for down payments to qualified applicants have plenty of funding available. Down Payment Resource lists local programs for easy access by borrowers.

There is no doubt the younger workers have suffered more than other age groups in the economic down turn. One result has been a lower rate of household formation, a critical predictor of first-time buyer activity. But according to Catherine Rampell at the New York Times household formation has been picking up. Over the last year, though, household formation has been picking up.

She quotes Mark Zandi of Moody’s Analytics: “Years’ worth of households that have been pent up will be unleashed in the next few years,” he predicted. “That’s one reason why I’m more optimistic than some other people about G.D.P. growth in the next few years. As we move to the mid-part of the decade, I think those households will get formed and that will power a lot of housing construction and consumption.”

To sum up, 2012 didn’t bring the year of the first-time buyer but it did see competition of with investors in decreasing, financing available with good credit, interest rates still at record lows, easing of down payments, heightened household formation. Perhaps 2013 will bring increased inventories of entry-level homes, higher employment and more new households.

Is the Year of the First-time Buyer yet to come?