Fannie Mae: Millennials Play Homeownership Catch-Up


Fannie Mae, Washington, D.C., said homeownership rate gains for young adults aging through their late twenties and early thirties actually accelerated during the early housing recovery, suggesting that oldest Millennials have begun to mount a homeownership recovery and close the homeownership attainment gap with their predecessors.  

The company’s latest edition of Housing Insights, (, examines the change in young-adult homeownership rates by tracking both age groups and birth cohorts.  

The article, Millennials Have Begun to Play Homeownership Catch-Up, said counter to data showing moderate declines in the homeownership rate for young adults, the homeownership rate has actually increased as younger Millennials grow older and pass from one age group to the next. The author, Patrick Simmons of Fannie Mae’s Economic and Strategic Research department, said analysis of change by age paints a different picture.  

“Since the onset of the housing bust, bad news has inundated the homeownership market. The national homeownership rate has fallen to multi-decade lows, with decreases widespread across geographic areas and demographic groups,” Simmons said. “The young-adult homeownership decline has been associated with several housing market shifts, including low shares of first-time home buyers and suppressed starter home construction.”  

Simmons said cohort analysis can be used to determine if Millennials have started to advance into homeownership at a faster pace as the economy and housing market have recovered, thereby beginning to reduce the homeownership rate deficits with prior generations that are evident in age group comparisons. By doing so, he said, the cohort analysis shows that homeownership rate gains for young adults aging through their late twenties and early thirties accelerated “significantly” during the early housing recovery.  

“For those Millennials who aged through their late twenties and early thirties between 2012 and 2014, homeownership rate gains were larger than the increments for predecessor cohorts passing through the same age range during the housing bust,” Simmons wrote. “The homeownership rate increment for those aging between 28-29 and 30-31 during the early recovery period was twice as large as it was for the predecessor cohorts during the housing bust, and was even significantly larger than it was for the cohort passing through this age range between 2006 and 2008.”  

Simmons said Millennials can play “catch-up” with prior generations as economic and housing market conditions improve. “In turn, greater young-adult homeownership demand could signal growing needs for starter homes, affordable home purchase mortgage products, education and counseling efforts targeted at inexperienced homeowners and other services and technologies suitable for youthful home buyers,” he said.  

The paper noted, however, that although improvements in the labor market improvements and credit access since 2014 should bolster Millennial homeownership demand, tight supply and rapid price gains in the lower tiers of the home sales market are reducing first-time home buyer affordability.  

“Mounting affordability challenges at a time when the young-adult homeownership rebound is just beginning highlight the importance of continued industry efforts to provide housing and mortgage products that meet the needs of the growing number of potential young home buyers,” Simmons said.