Interest in home buying has not slowed down this year. Among the different generational groups, millennials, those born 1981 to 1996, are showing the most enthusiasm when it comes to purchasing a home. According to the National Association of Home Builders (NAHB) latest Housing Trends Report, millennials are the most likely generation to have moved on from planning a home purchase to actively searching for a home to buy in the first quarter of 2021. All in all, Millennials seem eager to purchase homes this year.
According to the report, 73 percent of millennial prospective buyers were already active buyers in the first quarter of 2021. This is an increase from 54 percent a year earlier. In contrast, the share rose only moderately among Gen Z (born 1997 to 2003) and Gen X buyers (born 1965 to 1980), and not at all among boomers (born 1946 to 1964).
Why now?
Several factors are driving this trend. Buyers are afraid of missing out on still relatively low mortgage rates. The pandemic has also increased the desire for more space at home. For example, another recent NAHB study on consumer preferences revealed that 63 percent of recent and prospective home buyers want a home office. Another factor influencing home buying is the desire to move to the outlying suburbs.
Millennials also had a positive outlook about the housing stock in the near future compared to other generations. The share of millennial buyers who expect housing availability to ease up in the months ahead rose decisively between the first quarters of 2020 and 2021, from 26 percent to 42 percent. In contrast, the share declined slightly among the other generations.
What are the Statistics?
In terms of the actual number of homes buyers are seeing for-sale (that they like and can afford), 40 percent of Americans reported seeing more available in the first quarter of 2021 than the previous quarter. This is up from 31 percent a year earlier. Millennial buyers were the most likely to report seeing more homes for-sale in the market in the first quarter of 2021, at 46 percent. This is compared to 34 percent a year earlier. The share also rose among Gen Z and Gen X buyers, but much more moderately.
For some home buyers, housing affordability has improved. Millennials report the most improvement in housing affordability perceptions in the last year. Between the first quarters of 2020 and 2021, the share of buyers of this generation who can afford half or more of the homes available doubled (22 percent to 44 percent), while changing little among the other generations.
For more information about home buying, contact our local RCAP page or contact Stephanie Stipins.
Justin Green
President, Greater Fort Smith Association of Home Builders