New NAHB research shows that millennials tend to buy homes that are smaller, older, and less expensive than homes bought by older generations. Being the youngest home buyers with little or no accumulated wealth also affects how millennials shop and buy their homes.
The majority of millennials are buying homes for the first time in their lives. Three out of four millennials who purchased a home were first-time buyers, but a quarter traded their existing homes.
Compared to older generations, millennials are less likely to buy a new home. Less than 9 percent of millennial home buyers bought a new home. The share was close to 12 percent among older home buyers.
More than two-thirds of millennials who bought homes purchased single-family detached properties. Nevertheless, compared to older home buyers, the millennial generation shows a slightly higher preference for multifamily condominiums. Close to 9 percent of millennial home buyers bought a multifamily property compared to less than 6 percent of older home buyers.
Consistent with being the youngest and largely first-time home buyers, millennials tend to buy homes that are, on average, smaller and concentrated in the lower price ranges compared to homes purchased by older generations. Half of all homes purchased by millennials averaged less than 1,650 square feet of living space and cost less than $148,500.
The most common reason for moving reported by millennial home buyers is to establish their own household, followed by the desire to have a larger unit and own it.
When choosing a particular home, millennials are more likely to let financial reasons influence their choice, while older generations consider the right size most often.
When selecting a new neighborhood, the right house most often influences the decision for both millennial and older home buyers. However, millennials are more likely to also pay attention to proximity to work and having good schools.
Compared to older generations of home buyers, millennials are more likely to finance home purchases out of current income rather than out of accumulated wealth, and when taking out mortgages they are more likely to use unconventional zero-down mortgages.
The research is based on the 2013 American Housing Survey (AHS), the most recent release of this ongoing biennial housing data collection. Only housing units purchased in the two years preceding the 2013 AHS interviews are considered. Housing unit characteristics are tabulated by the age of the household of head, a person in whose name the housing unit is owned. Millennial home buyers are householders that were 33 years old or younger in 2013 and bought homes within the two years prior to the AHS interviews.