Millennials pushed home buying demand to new heights in 2020

In the housing market frenzy of 2020, homeownership demand climbed to an all-time high as millennials sought to become first-time buyers, according to First American.

The Homeownership Progress Index (HPRI) — a measurement of how lifestyle, societal and economic factors influence homeownership over time — rose to 70.21% in 2020 from 68.58% in 2019. Meanwhile, the national homeownership rate grew to 66.4% from 64.47% in that time. When HPRI exceeds the actual homeownership rate, it means market forces — like an extreme inventory deficit — suppress buying. When reversed, it indicates the homeownership level is greater than demand.

HPRI lagged behind the homeownership rate by an average of 1.7 percentage points from 2000 to 2009. The divide peaked at 2.96 percentage points in 2005 due to the easy access to credit that eventually led to the housing collapse, said First American Deputy Chief Economist Odeta Kushi. HPRI outpaced homeownership levels in every year since 2010 by an average of 3.5 percentage points, fueled by younger demographics.

As their financial stability grew alongside the typical milestones that incentivize a home purchase, millennial potential homeownership demand jumped 3.5 percentage points year-over-year. Generation Z followed with an increase of 2.5 percentage points, then came increases of 2.1 percentage points for Generation X and 1.3 percentage points for Baby Boomers.

“At age 30, 42% of millennials own homes, compared with 48% of Gen Xers and 51% of Baby Boomers at the same age,” Kushi said in the report. “While millennial homeownership has been delayed relative to their generational predecessors, millennials now have the greatest influence on the housing market and remain poised to fuel a ‘roaring 20s’ of homeownership demand.”

The New England region led the country in 2020 HPRI with 80.78% in New Hampshire, 78.88% in Vermont and 77.68% in Maine. However, Alabama had the largest annual gain of 3.74 percentage points, followed by 3.28 points in Rhode Island and 3.27 points in Idaho.

Among the 50 largest metro areas, Minneapolis had the highest HPRI with 74.97%, finishing just above 74.07% in both Boston and Pittsburgh. The biggest year-over-year changes came at 4.56 percentage points in Houston, 4.54 points in Indianapolis and 4.49 points in Denver.

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