Why Young Adults Are Saying No to Homeownership—and What It Means for the Future

More and more young Americans are choosing to rent instead of buy a home and in today’s economic climate, it’s not hard to understand why.

Over the last decade, housing affordability has steadily declined. Still, up until recently, many young adults were willing to stretch their budgets to buy. That trend seems to be shifting. Now, more young people are deciding to stay renters, not just because buying is out of reach, but because renting offers something increasingly valuable: flexibility.

This change could have long-term consequences. Homeownership has long been a central part of the American Dream and is deeply embedded in everything from our culture to our tax laws. The system we have today assumes that most people want and will eventually achieve homeownership. But as that assumption becomes less accurate, the gap between renters and homeowners may grow even wider, increasing inequality in ways the current system isn’t designed to address.

First-Time Buyers Are Getting Older—and Rarer

Buying a home was once a defining milestone of adulthood. Historically, first-time homebuyers were typically in their late 20s or early 30s. But today’s reality looks very different. According to the National Association of Realtors, the average first-time homebuyer is now 38 years old the oldest ever recorded. At the same time, the share of first-time buyers has dropped to just 24%, far below the historical norm of around 38%.

Redfin reports that only about one-third of 27-year-olds now own a home. By comparison, when baby boomers were that age, around 40% were homeowners.

For years, homeowners have enjoyed rising home values and historically low mortgage rates. But younger buyers today are contending with high prices and borrowing costs that make homeownership feel out of reach. And even though housing affordability improved slightly in 2024, with home prices rising slower than incomes, young adults are still choosing to rent.

Why? Because it’s not just about affordability anymore.

Flexibility Over Stability

Renting offers a level of adaptability that’s hard to match. In uncertain economic times, that’s a big deal. Census Bureau data shows that people who are willing to relocate for work often find jobs faster than those who don’t. For renters, picking up and moving is much easier than for homeowners who may be locked into a mortgage and stuck trying to sell.

The return-to-office movement is also influencing these choices. During the pandemic, remote work gave people the freedom to buy homes far from expensive job centers. But as more employers from government agencies to big corporations like Amazon and JPMorgan are mandating in-office work again, the high cost of owning a home in cities like New York, San Francisco, or Seattle is making renting the more affordable and realistic option.

Even in those cities, rents while high are often lower than the cost of a mortgage on a comparable property.

Climate Risk Adds Another Layer

Young people are also considering the risks that come with climate change. Owning a home in a flood-prone area or wildfire zone means taking on long-term financial risk. Renters, on the other hand, can relocate more easily if extreme weather events or environmental concerns arise. For a generation that’s grown up hearing about rising sea levels and record-breaking disasters, mobility matters.

A Cooling Rental Market Eases the Pressure

Historically, rising rents have pushed many renters into homeownership. But right now, that pressure isn’t as strong. A post-pandemic boom in multifamily housing construction has increased supply and created more competition among landlords. That’s helping stabilize rent prices in many areas and reducing the urgency for tenants to make the leap to buying.

According to recent data from the Federal Reserve, rental vacancy rates have increased, and this softening in the rental market is expected to keep rents relatively flat through the year.

Rethinking Housing Policy

This shift away from homeownership among young adults has big implications. While similar patterns were seen with millennials after the Great Recession, many of them eventually bought homes once their finances improved. But today’s circumstances are different. Economic instability, climate risk, and lifestyle preferences are all contributing to a more durable shift toward renting.

And the tax system hasn’t kept up.

The U.S. tax code provides significant benefits to homeowners through deductions for mortgage interest and property taxes essentially subsidizing those who buy. Renters, by contrast, receive far fewer benefits. If renting becomes a long-term lifestyle for more Americans, especially younger ones, that imbalance will become increasingly problematic.

One possible solution: create tax credits for renters. These credits could even be tied to retirement savings, allowing renters to build wealth in a way that mirrors the equity homeowners build through real estate. Homeownership may have been the most traditional path to financial security but it doesn’t have to be the only one.

Adapting to a New Reality

Young adults today are navigating a very different world from their parents and grandparents. The economy is more volatile. The job market is more fluid. Climate change is a looming threat. And major life decisions like buying a home are being made with all of that in mind.

They’re not rejecting homeownership entirely, but they are redefining what financial stability looks like. If policymakers and financial systems want to support this generation, they’ll need to adapt too.