The power of mortgage rates ‘cannot be overstated’
Though high mortgage rates persist, a new Realtor.com survey indicates some younger potential homebuyers are growing tired of delaying their purchase plans.
Despite steep mortgage rates and hesitancy in the housing market, millennial homebuying intent has increased in recent months, a new survey from Realtor.com found.
The findings suggest a generational shift in attitudes toward homeownership, even as the broader market remains subdued due to affordability concerns and the ongoing mortgage rate lock-in effect, which has tied up inventory of existing homes in many markets across the country.
Some millennials plan to buy — and soon: According to the April survey conducted among 2,203 adults, 23% of millennial respondents expressed an intent to buy a home within the next six months, up from 15% in September 2024. Millennials were the only generation surveyed with a heightened interest in homebuying over that period.
Meanwhile, nearly seven in 10 Americans (69%) said they did not plan to participate in a real estate transaction in the next six months.
"Despite current market challenges and persistently high mortgage rates, Millennials are showing a notable increase in home buying interest this spring compared to last fall," said Laura Eddy, vice president of research and insights at Realtor.com.
Even with the shift in homebuying intent among millennials, "the influence of mortgage rates cannot be overstated," Eddy said, adding, "The lock-in effect is still very much in effect."
Hesitation persists amid high rates: Mortgage rates have been back on the rise in recent weeks and remain a major deterrent across generational lines. While one-third of survey respondents said they delayed purchasing a home due to high rates, the impact was more pronounced among millennials and Gen Zers, with more than half saying they had postponed a purchase.
In contrast with younger potential buyers, 41% of baby boomers said interest rates do not impact their buying decisions.
Only a small fraction of respondents — just 2% — said they would consider buying while mortgage rates are above 6%. A clear majority — 63% — said they want rates to fall below 5% before they will consider a home purchase.
Homeowners may soon 'grow tired' of waiting: But the lock-in effect may not last forever — and there are indications that some potential buyers "feel stuck," according to Hannah Jones, senior research analyst at Realtor.com.
"Mortgage rates on top of an insufficient supply of budget-friendly homes complicates the affordability picture for many homeowners, especially first time homebuyers who do not have equity from their existing home to help offset mortgage rates," Jones said.
Even so, "We expect that this lock in effect will ease as more homeowners grow tired of waiting for significant rate changes and as life factors such as jobs, kids and retirements drive more to make a home purchase," Jones added.