Soaring costs and short supply shut millennials out of housing market

By Brett Rowland
The Center Square

Baby Boomers continue to dominate the U.S. housing market, buying and selling more homes last year than any other generation, while homeownership remains out of reach for many Americans.

Despite widespread hopes for homeownership, soaring prices, limited supply, and rising barriers for first-time buyers have made the U.S. housing market increasingly difficult to enter, especially for younger generations. Millennials and Gen Z struggle to gain a foothold, highlighting a generational divide reshaping the American dream of homeownership.

The National Association of Realtors’ 2026 Generational Trends report, released Wednesday, found Baby Boomers were still the largest group of home buyers, while first-time buyers dropped to a record low.

“The housing market remains sharply divided between homeowners with equity and first-time buyers trying to break in, many of whom are younger Millennials,” NAR Deputy Chief Economist Jessica Lautz said. “For many younger households, affordability challenges and limited inventory are still making homeownership difficult to achieve.”

Baby Boomers, a two-group cohort, accounted for 42% of all home purchases in the most recent survey. The Younger Baby Boomers (age 61 to 70) held the largest individual group share at 27%. Gen X (age 46-60) followed them at 25%. Then came the Older Boomers (71 to 79), tied at 15% with the Older Millennials (36 to 45). After that, there are Younger Millennials (age 27 to 35) at 11%. Then, tied for the smallest share of buyers are Gen Z (ages 18 to 26) and the Silent Generation (ages 80 to 100), at 4% each.

First-time buyers accounted for just 21% of all home buyers, down from 24% in the previous survey and the lowest share since the National Association of Realtors began collecting the data in 1981. Younger Millennials (ages 27 to 35) accounted for 60% of first-time buyers, down from 71% last year.

The median age for a first-time home buyer recently hit 40, a record high, according to a November 2025 report from the National Association of Realtors. The typical first-time home buyer was in their late 20s in the 1980s.

The cost of housing remained a challenge for most Americans, according to the latest survey. Polls consistently show that most Americans consider homeownership part of the American Dream, Lautz told The Center Square.

“Even though young adults are not homeowners, they do want home ownership,” she said.

The report shows the median income for all home buyers was $109,000 in 2024. Nationwide, median household income was $83,730 in 2024. The majority of home buyers (56%) reported income above above $100,000. Those with incomes below $55,000 a year bought a larger share of homes (16%) than those earning between $75,000 and $99,999 (15%).

Younger buyers mostly relied on savings for down payments, while older buyers used proceeds from previous home sales. Lautz noted that 26% of Younger Millennials got down payment help from friends or family.

Rental costs, credit card debt, and student loans delayed many buyers. About 39% of Younger Millennials reported student debt (median $30,000), compared to 27% of Older Millennials ($40,000).

Child care costs were another obstacle.

“Child care expenses are one of the things that are holding them back from purchasing a home,” she told The Center Square. “This has become a growing problem for this cohort to enter into homeownership.”

A Redfin report further highlights the housing market mismatch. That report, published earlier this month, found that empty-nest baby boomers own nearly twice as many U.S. homes with three or more bedrooms as millennial families. Boomers in one- to two-adult households own 28% of large homes, and those with three or more adults own another 7%, likely including adult children. Millennials with children own 16% of large homes, according to Redfin’s 2024 analysis of U.S. Census data by generation and household size. A shortage of housing options is part of the problem.

“There aren’t enough large homes on the market for the millennial families who need them, partly because in some parts of the country, there aren’t enough small, reasonably priced homes for older Americans to downsize into,” according to the Redfin report.

Lautz said Boomers often say they want to downsize, but rarely do.

“They tell us that they want to downsize, but if we actually look at the data, those who are younger boomers, they didn’t downsize at all, the square footage is exactly the same, and for those who are older boomers, they downsized by 200 square feet,” Lautz told The Center Square.

Both parties have plans in Congress to lower housing costs, but a lack of homes in the right locations and price ranges poses challenges. President Trump’s administration has tried to lower mortgage rates and prices, including directing the Treasury to buy $200 billion in mortgage bonds, but the ongoing shortage complicates those efforts.

Wages haven’t kept pace with home price growth. A recent report from the White House’s Council of Economic Advisers noted that from 2000 to 2023, real house prices increased 82%, nearly seven times the rate of real income growth of 12%. That report also noted long-running supply constraints. The CEA report estimated that the nation has a shortage of about 10 million houses. Other experts using different methods also estimate a shortage of several million homes, the CEA report noted.

That report noted that efforts to improve the market will “depend on the ability of housing supply to grow and keep up with demand.” The Trump administration blames supply shortages on a “government bureaucrat tax on housing supply from increasingly pervasive California-style fees, mandates, regulations, and red tape that add expensive government overhead to the cost of building.”

The NAR report was based on 6,103 responses to a 120-question survey sent to home buyers in July 2025 using a random sample weighted to be representative of sales across geographic areas.