Millennials accounted for 36 percent of all home purchases last year, retaining their ranking as the most active generation of buyers for the fifth consecutive year, and improving on the previous year’s figure of 34 percent. Despite that feat, the chief economist at the National Association of Realtors® said the overall share of millennial buyers remains at an underperforming level.
Those findings were reported in NAR’s 2018 Home Buyer and Seller Generational Trends study, a 144-page evaluation of the generational differences of recent home buyers and sellers.
Inventory constraints and rising housing costs are faulted for keeping overall activity among millennials subdued and “preventing some from leaving the more affordable confines of the Gen X and baby boomer parents’ homes.”
Gen X buyers were runners-up to millennials in home buying, but slipped from 28 percent in 2017 to 26 percent in this year’s report. Older baby boomers (born between 1945 and1954) made up 14 percent, followed by the Silent Generation (born between 1925 and 1945), at 6 percent (declining from 8 percent in 2017).
NAR chief economist Lawrence Yun said this year’s survey reveals what it takes to be a successful millennial buyer in today’s housing market. He noted even though sales to millennials reached an all-time survey high, “stubbornly low inventory conditions pushed home prices out of reach for many.”
The latest trends report also noted millennials had more year-over-year purchasing power, but they also had higher student debt balances, with slightly more in this group said saving for a down payment was the most difficult task in buying a home.
“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 stark competition, speedy price growth and the need to save more in order to buy.”
Yun expects challenging market conditions will continue. Unless more Gen Xers decide to sell, and entry-level home construction picks up significantly, he believes many aspiring millennial buyers will continue renting.
The NAR survey examined other generational trends, including multi-generational home purchasing (most prevalent among younger boomers), factors that matter most when buying a home (friends and family), and the types of homes various generations prefer.
Survey respondents were also asked about using a real estate agent. Regardless of age, most buyers and sellers reported working with an agent. At least 84 percent in every generation worked with an agent to close their sale. At 90 percent, millennials were the most likely to purchase a home through a real estate agent, with help in understanding the buying process cited as the top benefit the agent provided.
Nearly 8,000 recent home buyers took part in the study. NAR mailed a 131-question survey to a geographic representation of 145,800 buyers. Respondents had the option to participate via hard copy or online, and could choose English or Spanish.