Millennials comprise the majority of potential homebuyers in the real estate market. This is the reason why several homes are already being constructed, which are more affordable to cater to the younger market and first-time buyers. Despite these measures, a recent report shows that homeownership rate in the U.S. is close to its lowest in the last 48 years. What is keeping millennials from buying a home?
A new report from the U.S. Commerce Department shows that the homeownership rates in the U.S. are close to reaching its lowest since 1967, states Realtor.com. According to the publication, the number of homeowners in the country dropped to 63.5 percent from 63.8 percent in the fourth quarter of 2015.
This is said to be close to the lowest homeownership rate in the last 48 years, which reflects a number of different reasons. The publication noted that homeownership rates are at its lowest in the West at 58.7 percent, which may be a reflection of the median prices of homes in that region.
"Those numbers are directly a reflection of affordability," said the publication's chief economist, Jonathan Smoke. "Home prices are much lower, and people are more able to own homes, in the South and Midwest."
Homeownership rates in the South are at 64.8 percent and 68.9 percent in the Midwest. The principal economist at HousingEcon.com, Gerd-Ulf Krueger, also told the publication that despite the drop in homeownership rates, millennials are expected to purchase their homes this year.
The only thing that is keeping millennials from buying a home is the availability of affordable homes in the market. As previously reported here on Realty Today, first-time buyers are having a hard time finding a house to buy because of the rising prices of homes in the market.
The good news is that prices of new homes dropped in order to attract first-time buyers. In March, there was a 3.2 percent drop in prices of new homes for sale across the U.S. This has led to an increase in new home sales during the same period.
