Millennial home buyers underperform despite being top purchasers
Close to a third of all home purchases were made by millennials over the past year, but tight inventory and affordability issues prevented them from reaching their buying potential, according to the National Association of Realtors.
Despite housing market hurdles, an all-time-high 36% of house purchases were made by millennials in the 12-month period ending in June 2017, up from 34% the previous year.
Millennials were the most active of all homebuyers for the fifth consecutive year, but the generation is still underperforming its potential because supply constraints are putting upward pressure on home prices.
Over the past year, millennials needed greater purchasing power to buy a home. The average millennial buyer had a household income of $88,200, up from $82,000 from the previous year, and purchased the same-sized home of 1,800 square feet at a more expensive price of $220,000, up from $205,000 from the prior 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," Lawrence Yun, the Realtor group's chief economist, said in a press release.
"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," he continued.
These burdensome market conditions will continue causing aspiring millennial homebuyers to rent unless more Gen X homeowners decide to sell and the construction of entry-level homes picks up substantially.
Gen Xers accounted for 26% of all home purchases made over the past year, followed by younger and older baby boomers, who made 18% and 14% of all house purchases, respectively.