High home prices and mortgage rates are making it challenging for Americans, especially first-time buyers, to purchase homes. Homeowners with low or no mortgage payments are hesitant to sell, restricting supply and maintaining elevated prices. The number of first-time homebuyers has seen a significant decline, dropping from nearly 3.2 million in 2004 to about 1.14 million in 2024. Many older homeowners aren't downsizing due to high mortgage rates, while the percentage of homeowners without a mortgage has increased, indicating a shift towards mortgage-free ownership.
Many current homeowners, especially those with low or no mortgage payments, are staying put rather than selling, further limiting supply and keeping prices high.
The quintessential American dream is to become a homeowner. For generations, it's been seen as a symbol of economic stability and a beacon for building wealth.
Older generations who bought homes decades ago—and who would typically be ready to downsize by now—aren't budging out of fear of relatively high mortgage rates.
The share of homeowners who don't have a mortgage payment rose to 40% in 2023, up from 33% in 2010, reflecting a trend toward outright homeownership.
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