As the housing industry celebrates “New Homes Month” in April, recent data from the U.S. Census Bureau confirms Millennials are increasingly entering the housing market as first-time buyers… good news for custom integrators.
The homeownership rate of Millennials — now at 36 percent — registered the largest gains among all age groups in 2017. As the nation's largest demographic group, more than 70 million Millennials are poised to dominate the home buying market in the months and years ahead.
“Millennials are recognizing the benefits of homeownership and are eager to buy their first homes,” says National Association of Home Builders (NAHB) chairman Randy Noel, a custom homebuilder from LaPlace, La.
“And contrary to conventional wisdom, this generation is in the market for single-family homes in the suburbs as they look ahead to raising their families.”
Homebuilders recognize the changing demographics and the increasing demand for entry-level homes, yet rising construction costs and limited lot availability create significant challenges to building smaller, single-family detached homes that are both affordable to first-time buyers and cost-effective for builders.
Millennials Targeting Townhouses
With Millennials willing to compromise on space, townhouses are becoming a more affordable option for younger buyers ready to purchase their first homes. After experiencing a drop during the Great Recession, the share of new townhome construction has been rising since 2009. According to NAHB analysis of census data, townhome construction in 2017 was up 7 percent from 2016.
In terms of common requirements, Millennials are often looking for homes with three bedrooms and two bathrooms, outdoor space, flexible areas that can be used for a variety of purposes, and more luxurious finishes like quartz countertops. Of course, technology is likely another desired element among this tech-centric generation.
Ongoing economic growth and rising wages are expected to continue boosting housing demand throughout 2018.
NAHB analysis of the Census Bureau's Housing Vacancy Survey shows that the number of homeowner households increased by 1.5 million in 2017, while the number of renter households declined by 76,000.