Millennials are now buying more homes than any other group, but low inventory and rising prices kept their overall activity subdued – and kept many of them living in their parents’ homes for the time being.
Thirty-six percent of all home purchases were made by millennials over the last year, according to the National Association of Realtors’ 2018 Home Buyer and Seller Generational Trends study. That makes millennials the most active generation in hoembuying for the fifth straight year. Gen-Xers ranked second at 26%, followed by younger and older baby boomers at 18% and 14%, respectively. The silent generation – those born between 1925 and 1945 – accounted for 6% of homebuyers over the last year.
Although home sales to millennials have reached an all-time high, low inventory has pushed home prices out of reach for many younger buyers, according to Lawrence Yun, NAR chief economist. The typical millennial buyer over the past year had an income of $88,200, compared to just $82,000 a year ago. Millennial buyers were also spending much more to purchase the same size of home – an average of $220,000 for an 1,800-square-foot home this year, compared to $205,000 last year.
“Realtors throughout the country have noticed both the notable upturn in buyer interest from young adults over the past year, as well as mounting frustration once they begin actively searching for a home to buy,” Yun said. “Prices keep rising for the limited number of listings on the market they can afford, which is creating start competition, speedy price growth and the need to save more in order to buy. These challenging market conditions have caused – and will continue to cause – many aspiring millennial homebuyers to continue renting unless more Gen-Xers decide to sell, and entry-level home construction picks up significantly.”