First American's sixth annual Homeownership Progress Index is pointing to a strong uptick in millennial homeownership in the near future. The First American HPI reported that the millennial demographic has the potential to lead a homeownership demand comparable to the "roaring 20s."
"Since 2012, potential homeownership demand, based on the lifestyle, societal and economic factors tracked in our HPRI model, has exceeded the actual homeownership rate. Millennial household formation is a major demographic trend driving the increase in potential demand, but rising house-buying power, driven by wage growth and persistently low mortgage rates have also helped boost potential demand," said Mark Fleming, chief economist at First American, according to the report. "Between 2011 and 2018, the annual average of the 30-year, fixed-rate mortgage has been near or below 4.5 percent, significantly below the pre-2011 average of 8.9 percent. In 2019, mortgage rates unexpectedly fell after trending up through much of 2018, helping increase house-buying power and further elevating potential homeownership demand, which exceeded the actual homeownership rate by 3.6 percentage points."