Millennials show rising interest in buying homes despite high mortgage rates
Millennials (people born between 1981 and 1996) are far more interested in buying homes today than they were just six months ago. That makes the group the only generation whose interest in homeownership has increased since September 2024. However, these same people are tending to put off the investment due to sky-high mortgage rates.
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The new data comes from an online survey of 2,230 adults conducted by Realtor.com. Six months ago, 15% of millennials said they were interested in buying a home. Now 23% are interested, according to the latest survey.
Still, that doesn't mean more 29- to 44-year-olds are actually buying homes.
In a press release, Laura Eddy, vice president of research and insights at Realtor.com, noted how the desire to buy a home is being sidelined by soaring mortgage rates. 'Even though we found a change in millennial home-buying intent, the influence of mortgage rates cannot be overstated, with the vast majority of Americans, including millennials, prioritizing lower rates before committing to a purchase.'
Eddy added: 'The lock-in effect is still very much in effect '
The survey also found that most Americans don't have plans to buy a home in the immediate future. Some 69% said they don't intend to go through with a home purchase over the next six months. And one-third of respondents said they have pushed back plans due to those high mortgage rates. But millennials and Gen Zers have delayed their plans at disproportionate rates, with more than half saying they've had to put off their plans to buy a home.
Two-thirds of those surveyed by Realtor.com said mortgage rates have great influence over whether or not they will buy a home. Only 2% said they would even consider a home purchase with mortgage rates exceeding 6%; the threshold appears to be somewhere below 5% for 63% of respondents. (Meanwhile, the national average interest rate on a 30-year fixed mortgage is currently 6.95%, according to Bankrate.)
'Across much of our research we see a trend where potential homebuyers feel stuck when it comes to buying a home due to their current mortgage rate,' Hannah Jones, senior research analyst at Realtor.com, said in the release.Jones continued, 'Mortgage rates on top of an insufficient supply of budget-friendly homes complicates the affordability picture for many homeowners, especially first-time homebuyers who do not have equity from their existing home to help offset mortgage rates.' Jones added that the experts at Realtor.com believe potential homebuyers are likely to get tired of waiting for change, and out of necessity may go forward with purchases even if they aren't totally satisfied with the rates.
According to recent median home price listings, how much Americans need to earn to afford a home is growing exponentially. As of April 2024, they needed to earn $47,000 more per year to afford a home than they would have just six months prior.
This post originally appeared at fastcompany.comSubscribe to get the Fast Company newsletter: http://fastcompany.com/newsletters
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