High interest rates, rising prices not deterring young homebuyers

Young Americans remain committed to buying a home, but even they recognize it remains a sellers' market.

A home under construction at a development in Eagleville, Pennsylvania.
Matt Rourke / AP

There are many reasons why now is not the best time to buy a home. Thirty-year fixed mortgage rates have hovered between 6% and 7% all year, and median home values are up 5% in the last year, according to Zillow. 

Still, younger Americans say they’re dead set on buying a home. 

According to data released Tuesday by Bank of America, 62% of Gen Z and 55% of millennials plan to either speed up their home purchases or buy when they originally planned. 

Also, more Americans say they’re more confident about their ability to buy than say they are less confident, Bank of America’s survey found. 

“The market is less frenzied as rates have moderated, and that may be impacting perception,” said Matt Vernon, head of retail lending at Bank of America. “And low inventory is still creating a highly competitive environment. Homebuyers are doing the right thing by taking time to understand the market, weigh their priorities and determine what fits into their budgets.”

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But there is a recognition that the market remains competitive. Nearly 55% of prospective homebuyers say the market is more competitive than a year ago, compared to 18% who say it’s less competitive. 

About 56% of potential Gen Z and millennial homebuyers say they plan to buy a home in the next two years. One big reason is they say they’re tired of renting, while others say they want to start building equity. 

Zillow’s data indicates that even though in the last year, housing prices have gone up, increases have largely cooled over the last six months.