by NAR Senior Economist and Director of Forecasting, Nadia Evangelou
Mortgage rates plunged this week. According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent from 5.7 percent the previous week. As a result, home buying is about 5 percent more affordable than a week ago. This translates to about $100 less every month on a mortgage payment.
Meanwhile, the millennial generation is significant in size and wealth. Millennials represent a large segment of households and the largest cohort of home buyers. This group consists of roughly 28 percent of U.S. households and 43 percent of buyers. About 2.6 million homes were purchased by Millennials in 2021. Although rates are significantly higher than last year, they are still historically low. Among Millennials, 31 percent can still afford to buy a typical home. Nevertheless, among Millennials who are still renting, only 18 percent earn the qualifying income to purchase a median-priced home. This is a decrease from 37 percent a year ago.