Millennials and younger adults in the United States face increasing challenges in purchasing their first homes, as a combination of rising home prices and elevated mortgage rates has eroded affordability over the past decade. A recent analysis highlights that, in 2024, the median home price reached 3.5 times the annual income of an average household under 40, marking the highest price-to-income ratio since the mid-2000s.

In 1975, the typical home cost about 2.4 times the yearly income for under-40 households, rising modestly to 2.9 by 2019 before surging to 3.5 in recent years. During the same period, wage growth lagged behind escalating home values. Between 2019 and 2024, median home prices rose by approximately 30%, from $269,600 to $350,000, while median incomes increased only 9%, from $92,700 to $100,900.

The widening affordability gap, compounded by mortgage rates climbing from around 3.9% in 2019 to 6.7% in 2024, has significantly increased monthly housing costs for potential buyers. For example, a buyer in 2019 could expect monthly payments of about $1,689 on an average home with a 3.5% down payment. By 2024, similar buyers would face monthly payments exceeding $2,700 for a higher-priced home with a substantially higher interest rate, making many question whether buying is a viable option compared to renting.

This affordability crisis has contributed to a decline in first-time homebuyers, who accounted for only 21% of all home purchases in 2025—the lowest share on record. The typical age of first-time buyers has also risen to 40 years old, reflecting the difficulties younger adults encounter entering the housing market.

A survey of adults under 40 found that nearly 90% believe buying a first home is harder now than it was for their parents’ generation. Furthermore, only 24% of this age group consider homeownership a “very good investment,” compared with 38% of those aged 60 and older.

While high-profile metropolitan areas such as Los Angeles, San Francisco, and Boston show price-to-income ratios ranging from 4.3 to 7.5, affordability issues are spreading to a broader range of cities. Among the 160 metro areas studied, 142 saw home prices outpace incomes for young adults between 2019 and 2024. However, housing remains relatively affordable in some regions, including Springfield, Illinois; Utica-Rome, New York; Cleveland; Pittsburgh; and several other mid-sized metro areas.

Many younger adults have responded to these barriers by delaying home purchases, increasing reliance on multi-generational living arrangements, or choosing to share housing with roommates. Homeownership rates among individuals aged 25 to 34 declined from 40% in 2005 to 29% in 2024, while the share living with parents rose from 12% to 20% during the same period.

Despite the current challenges, some experts anticipate gradual improvement in affordability over the next decade. Housing price increases have slowed markedly, with recent data showing only a 2% rise in median prices year-over-year, and inflation-adjusted values trending slightly downward. Nevertheless, costs associated with homeownership, such as property taxes and insurance, continue to climb, suggesting that while entering the market may become somewhat easier, maintaining homeownership could remain challenging.

Housing economists caution that relief for first-time buyers is likely to be incremental rather than transformative, indicating that affordability pressures may persist for the foreseeable future.