Millenial Buyers

Millennials make up largest share of home buyers for fifth straight year

Bucking the stereotypes that they haven't yet moved out of their childhood bedrooms or eschewed homeownership for urban apartments, millennials accounted for the largest share of home purchases in the United States in the past year.

In its recently released Home Buyer and Seller Generational Trends study, the National Association of Realtors found that 36 percent of all home purchases went to millennials or younger buyers. This share was up from 34 percent in 2017. The study defined the youngest age bracket as buyers ages 37 and under.

Generation X buyers also became more prevalent. The share of this generation, defined as ages 38 to 52, rose from 26 percent to 28 percent.

Younger baby boomers (ages 53 to 62) accounted for 18 percent of purchases, while older boomers (ages 63 to 71) made up 14 percent of these sales. Eight percent of homes sold in the past year were bought by members of the "Silent Generation," ages 72 to 92.

Lawrence Yun, chief economist at the National Association of Realtors, described the share of millennials buyers as "subdued" even though they made up the largest share of buyers. He suggested that higher home prices and a limited number of homes for sale have kept many younger buyers from entering the housing market.

The typical millennial buyer in the study had a household income of $88,200 and spent $220,000 on an 1,800-square-foot home. Last year, millennials also tended to buy 1,800-square-foot homes, but the median cost was $15,000 lower.

Yun said millennials also continued to be burdened with student loans. Forty-six percent of millennial buyers had student loans, with a median outstanding balance of at least $25,000.

"Realtors throughout the country have noticed 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."

HOUSING CHOICES

The desire to own their own home was the primary motivator for purchasing a residence, cited by 30 percent of all buyers. This was especially prevalent among younger respondents, with 48 percent of millenials, 28 percent of Generation X respondents, and 17 percent of younger boomers giving this reason.

Older buyers were more likely to be buying a home to move closer to friends or family. One in four older boomers or Silent Generation respondents said this motivation factored into their decision.

Younger buyers who purchased a new home were most likely to do so because they believed such properties would not require renovations or have problems with their plumbing and other systems. Older buyers were more likely to be swayed by the ability to customize the home's design and features.

Millennials who bought a previously owned home were most likely to do so because of the lower price, with 42 percent giving this reason. Other generations were more likely to say they thought the property was a better value overall.

Each generation cited the overall quality of the neighborhood as the most important factor in choosing where they bought a home. Younger buyers also tended to base their choice on how convenient the neighborhood was to their job and the quality of the school system. Millennials, older boomers, and the Silent Generation also placed importance on how convenient the neighborhood was to friends and family, with 43 percent of each generation's buyers saying this was a factor in their decision.

"The sense of community and wanting friends and family nearby is a major factor for many homebuyers of all ages," said Yun. "Similar to Gen X buyers who have their parents living at home, millennial buyers with kids may seek the convenience of having family nearby to help raise their family."

Buyers were typically uncertain about how long they would spend in the home, with 36 percent saying they did not know how long their tenure would last. Twenty-seven percent of buyers said they expected to live in the home for 16 years or longer, while 14 percent said they would likely move after eight to 10 years.