High Mortgage Rates Are Not Killing the Dream of Homeownership for One Generation

High mortgage rates are leaving many homebuyers waiting on the sidelines—but they’re not killing the dream of homeownership for millennials.

Millennials are the only generation with an increased interest in buying a home, according to a new Realtor.com® survey. Nearly 1 in 4 millennials said they plan to move ahead to buy a home in the next six months despite the uncertain market. That might be surprising, considering that half of millennials and Gen Z have postponed purchases.

“Persistently high mortgage rates continue to limit buyer activity,” says Hannah Jones, senior economic research analyst at Realtor.com. “One-third of respondents indicated that they have delayed a home purchase due to still-high rates, consistent with sentiment last fall when rates were near current levels.”

Still, the number of millennials, who fall between the ages of 29 and 44, thinking of purchasing a home grew to 23% this year, compared with last September when that sentiment was only 15%.

One-third of the 2,203 people surveyed by Realtor.com said they have delayed buying a home because of the high rates—and that number is holding steady from a September 2024 survey. Gen Z, the youngest generation, which comprises ages 13–28, is the most cautious. The adults in that generation who can invest signaled they are wary of high mortgage rates and would rather sign a lease than be locked into a high mortgage rate.

Current mortgage rates have risen over the past three weeks to 6.86% as of May 22, according to Freddie Mac data.

“Younger generations, many of whom are first-time buyers, are the most impacted by high interest rates,” says Jones.

Who’s willing to buy

Even though two-thirds of those surveyed admit mortgage rates have influenced their decision to buy a home, there is a generation that doesn’t see it as a drawback.

Baby boomers (41%), who are between 61 and 79 years old, said mortgage rates do not have an impact on their decision to buy a home. Only 2% would consider purchasing a home with mortgage rates exceeding 6%, but a majority—63%—are looking for rates below 5% before they would consider purchasing a home.

The last time a 30-year fixed mortgage fell below 5% was in August 2022—when it reached 4.99%, according to Freddie Mac.

When it comes to paying for a home, 57% across all generations surveyed said they used their personal savings for financing, 15% tapped personal investments or retirement accounts, and 12% received gifts or loans from family members.

Among those surveyed who plan to buy a home in the next six months, 1 in 4 said they plan to use retirement accounts or personal investments for financing.

“Across much of our research, we see a trend where potential homebuyers feel stuck when it comes to buying a home due to their current mortgage rate,” adds Jones.

An April Realtor.com survey revealed that half of potential sellers who have a mortgage feel “locked in” because of the current high rates, and that feeling grows for homeowners who have been thinking about selling for more than a year.

“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,” says Jones.

“However, 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.”