The U.S. housing market is 'starved' for affordability: Boomers edge millennials and Gen Z out of homeownership in record numbers

The U.S. housing market is increasingly inaccessible for younger generations, with the share of first-time buyers falling to a record 21% and their median age rising to 40 years in 2025, while the overall median buyer age hit 56, according to NAR data. This trend, driven by elevated home prices, high mortgage rates, and wages failing to keep pace (requiring $141,000 income for a median home vs. average salary of half that), signals a significant intergenerational wealth transfer challenge, necessitating future adjustments in housing costs or real wages.

Analysis

The U.S. housing market is exhibiting significant affordability challenges, particularly for younger demographics, driven by elevated home prices and high mortgage rates. A National Association of Realtors (NAR) report indicates that in 2025, the share of first-time home buyers fell to a record low of 21%, with their median age climbing to an all-time high of 40 years, a substantial increase from 28 years in 1991. This trend underscores a structural shift in market accessibility.

The widening gap between income and housing costs is a critical factor; a 2024 NAHB report suggests an income of approximately $141,000 is needed to afford a median-priced home, nearly double the average U.S. salary. This disparity has pushed the overall median age of home buyers to a record 56 years in 2024, up from 46 in 2021, as noted by Apollo Academy Chief Economist Torsten Sløk, citing NAR data.

This environment is actively stalling the intergenerational transfer of housing wealth, with Deutsche Bank's Jim Reid highlighting that 46% of homes purchased in 2024 were by those aged 60 and over. The long-term resolution necessitates either a significant adjustment in interest rates and home prices or a sharp increase in real wages for younger generations to regain market access.

Key Decisions for Investors

• Investors should assess the long-term implications of delayed homeownership on housing market dynamics and related sectors, considering potential shifts in demand for rental properties versus single-family homes.
• Consider investment strategies focused on rental housing or alternative asset classes that benefit from a prolonged period of high housing costs and limited first-time buyer entry.
• Closely monitor macroeconomic indicators such as real wage growth, interest rate trajectories, and housing supply adjustments for potential market rebalancing signals that could alter investment theses.