young happy woman buying new house and taking keys from realtor
Millennial home buyers are more active than any other generational group, but low inventory and climbing real estate prices continue to stall activity.
According to the 2018 Home Buyer and Seller Generational Trends Report from the National Association of Realtors (NAR), 36% of all home purchases were made by millennials over the last year. This makes millennials–those who became adults around the year 2000–the most active home buying generation for the fifth consecutive year.
Coming in second, the Gen-Xers accounted for 26% of all home purchases in the last year. Following Generation X were younger and older baby boomers, being responsible for 18% and 14% of home purchases, respectively. The silent generation–those born between 1925 and 1945–accounted for just 6% of home sales.
Although the number of home sales to millennials has reached an all-time high, tight inventory levels and high demand have driven home prices out of reach for many younger buyers, according to Lawrence Yun, chief economist for NAR.
“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,” said Yun. “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.”
While income for millennials has increased, it may not be enough of a boost to make up for the rapid rise of home prices. Over the last year, the average millennial home buyer had an income of $88,200, compared to just $82,000 the year prior, according to the NAR study. The study also found that millennial buyers were spending more to purchase the same size home. Millennials spent an average of $220,000 for an 1,800-square foot home, whereas a year ago, they spent $205,000 for the same size.
Something else worth noting is that well over half of millennial home buyers last year were buying homes for the first time. According to the report, 65% of millennial buyers were first-time buyers while first-timers made up 34% of all buyers.
Here are a few more key findings from the report:
- 65% of recent buyers were married couples, 18% were single females, seven percent were single males and 8% were unmarried couples.
- The highest percentage of single female buyers was found in the 72 and older age group, while the highest percentage of unmarried couple buyers was found in the 37 and younger group.
- 37% of all buyers had children under the age of 18 living with them.
- The 38-52 age group was found to be the most racially diverse segment of the home buying population in 2017, with 27% identifying themselves as Hispanic/Latino, black/African American, or Asian/Pacific Islander.
- Overall, buyers said they expect to stay in their homes a median of 15 years, although 18% said they don’t plan to move at all.
- For buyers 37 and younger, the expected length of time in their home is 10 years, compared to 20 years for buyers age 53-62.
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