Millennial Homeownership Delayed, Not Denied, According to First American Homeownership Progress Index

Despite pandemic, millennials poised to fuel a “roaring 20s” of homeownership demand, says Chief Economist Mark Fleming

July 1, 2020, Santa Ana, Calif.

First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the sixth annual First American Homeownership Progress Index (HPRI), which measures how a variety of lifestyle, societal and economic factors influence homeownership rates over time at national, state and market levels. It’s available as an interactive tool that can be tailored to showcase how trends in economic conditions, education, income, marital status, ethnicity, and family size impact potential homeownership demand over time across the United States at national, state and metropolitan area levels.  

Chief Economist Analysis: Homeownership Rate Continues to Trail Potential Demand

“As we navigate the unprecedented impact of COVID-19, home has taken on added significance and there are signs that homeownership remains one of the main tenets of the American Dream. After hitting a bottom in the second week of April, mortgage applications to purchase a home increased for nine consecutive weeks, even exceeding levels from a year ago for five straight weeks,” said Mark Fleming, chief economist at First American. “Housing may be positioned to lead the recovery, a role it has traditionally played in previous downturns, with the exception of the Great Recession. In the recovery from the Great Recession, the homeownership rate hit a generational low of 63 percent in 2016, but it has been steadily rising since. A combination of demographic and economic factors has driven the steady rise since the low point and remain poised to fuel demand in the years ahead.

“The homeownership rate is influenced by underlying demographic and economic factors, as well as housing market conditions. Close examination of these underlying forces can provide a more in-depth understanding of the changes in the homeownership rate over time,” said Fleming. “Our annual Homeownership Progress Index accounts for the influence of critical lifestyle, societal and economic trends on the likelihood of owning a home. Understanding these factors and tracking how they change over time allows us to measure potential homeownership demand.

“From 2004 through 2008, speculation and easy access to credit caused the actual homeownership rate to exceed potential homeownership demand by an average of 3 percent, peaking at 3.5 percentage points in 2005. The gap then decreased until 2012, which is the first time when potential homeownership demand as measured by the HPRI exceeded the actual homeownership rate,” said Fleming. “When the HPRI exceeds the actual homeownership rate, it indicates that potential demand for homeownership may be stifled by market forces. Today, the primary constraint on the actual homeownership rate is most likely historically low supply of homes for sale. The reverse indicates that the homeownership rate is above the levels supported by demographic and economic fundamentals and may be pushed higher by speculation or easy access to credit.

“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 Fleming. “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.” 

Potential Demand Expected to Grow Despite Economic Downturn

“Millennials are the largest generational group in the history of the U.S., and that’s not the only thing that differentiates them from their generational predecessors. Millennials are more diverse, more educated, and have historically chosen to delay critical lifestyle triggers to buying a first home, including getting married and having children, in favor of furthering their educations,” said Fleming. “However, according to a 2019 survey, 88 percent of millennials believe homeownership is important for personal success, and there are signs that millennials will continue to be a driving force in homeownership demand. It appears millennial homeownership has been delayed, not denied.

“For example, in 2019, potential homeownership demand improved, mostly thanks to millennials, those between the ages of 22 and 38 (in 2019). Potential homeownership demand in 2019 increased by three percentage points for millennials, outpacing the gains of Generation X (1.7 percentage points) and Baby Boomers (0.8 percentage points),” said Fleming. “It’s clear that as millennials form households and begin to make lifestyle decisions, such as getting married and starting families, they are increasingly choosing homeownership over renting.

“Despite the pandemic-driven economic downturn in 2020, millennials are still aging, in large numbers, into the key lifestyle decisions that increase the likelihood of homeownership. This year, the largest section of millennials will turn 30, entering their prime homeownership years,” said Fleming. “Though the pandemic presents new challenges to achieving homeownership, millennial lifestyle decisions will continue to support potential homeownership demand in the years ahead, meaning millennials may be poised to fuel a ‘roaring 20s’ of homeownership demand.” 

2019 Homeownership Progress Index

  • Nationally, potential homeownership demand represented by the HPRI increased one percentage point in 2019 compared with 2018, based on changes in the underlying lifestyle, societal and economic data.
  • Factors that increased potential homeownership demand included house-buying power growth (+0.9 percent), the higher share of married households (+0.2 percent), an aging population (+0.2 percent), rising educational attainment (+0.1 percent), and a decline in the U-6 unemployment rate (+0.04 percent).
  • The decline in the number of children per household (-0.04 percent) and the increase in the share of people moving to metropolitan areas (-0.01 percent) were among the factors that decreased potential homeownership demand.
  • Potential homeownership demand increased from 2018 to 2019 in 37 of the 50 metropolitan areas tracked by First American, as demographic and economic trends in these cities raised the likelihood of homeownership. 

2019 Homeownership Progress Index State Highlights

  • The five states with the greatest year-over-year increase in potential homeownership demand are: Massachusetts (+3.5 percentage points), Delaware (+3.1 percentage points), Hawaii (+2.4 percentage points), Kansas (+2.2 percentage points) and Nevada (+2.2 percentage points).
  • The states with the greatest year-over-year decrease in potential homeownership demand are: Montana (-0.7 percentage points), Vermont (-0.7 percentage points), Indiana (-0.4 percentage points), Connecticut (-0.4 percentage points), and Texas (-0.3 percentage points). 

2019 Homeownership Progress Index Local Market Highlights

  • Among the largest 50 Core Based Statistical Areas (CBSAs), the five markets with the greatest year-over-year increase in potential homeownership demand are: Kansas City, Mo. (+4.4 percentage points), Boston (+3.5 percentage points), Richmond, Va. (+3.5 percentage points), Virginia Beach, Va. (+3.1 percentage points) and New Orleans (+2.9 percentage points).
  • Among the largest 50 CBSAs, the markets with the greatest year-over-year decrease in potential homeownership demand are: Orlando, Fla. (-2.8 percentage points), Louisville, Ky. (-1.0 percentage points), Riverside, Calif. (-0.7 percentage points), Detroit (-0.7 percentage points), and Dallas (-0.7 percentage points). 

Next Release

The next release of the First American Homeownership Progress Index will be posted in June 2021. 


The methodology statement for the First American Homeownership Progress Index is available at


Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2020 by First American. Information from this page may be used with proper attribution. 

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $6.2 billion in 2019, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2020, First American was named to the Fortune 100 Best Companies to Work For® list for the fifth consecutive year. More information about the company can be found at