Owning a home is core to Millennials’ American Dream. The good news is that the largest generation in America is highly motivated to purchase a home in 2026, despite housing market unaffordability.
We appreciate that policymakers want to help our generation catch up to our Baby Boomer parents and Gen X siblings in homeownership. However, some national proposals that sound appealing will have little impact on increasing younger generations’ ability to buy a home. The best ways to move Millennials from motivated and into a new home are still to increase housing supply through deregulation and tax policies that boost household resources and reward saving.
Most new young homebuyers in America will purchase a single-family home. Their biggest competition is their well-funded parents. The median age of a first-time home buyer hit an all-time high of 40, and first-time buyers sank to the lowest share of home sales in decades last fall. According to the 2025 Homebuyers and Sellers Generational Trends Report compiled by the National Association of Realtors, Baby Boomers dominated home buying in 2025, comprising 42% of homebuyers because they have the cash to spend. Some 29% of home buyers were Millennials, and just under a quarter were Gen X.
All-cash purchases recorded an all-time high of 26% of deals last year, up from less than 10% in the early 2000s. Median down payments topped an all-time high of nearly 20%, primarily funded by savings and, secondarily, by tapping 401K savings. Rising rent prices and student debt make it difficult for Millennials to save for a down payment, even as falling interest rates and falling home prices pique their interest.
The popular narrative is that institutional investors are locking first-time homebuyers out of the market nationally. It’s false. Generational market competition explains more about housing market dynamics than do Wall Street investors.
The universe of real estate investors accounted for 29% of home purchases in June 2025, elevated from recent years, but below their 32% share at the start of 2025. Institutional investors with over 100 single-family homes own a tiny percentage of single-family homes (1% to 5%), and that share is falling. Mom-and-pop investors with fewer than 10 properties are the most common investor type, holding a 14% share of the purchases. In fact, they dominate the investor market, capturing 90% of investor-owned inventory.
Investors play critical roles in boosting desirable housing supply for both buyers and renters. Regular Americans generate cash flow and build generational wealth by purchasing properties for rent. Many institutional investors take on expensive fixer-uppers that they resell, 60% of which go to families looking for move-in-ready properties. Most recently, institutional investors have started pivoting; they sold more single-family homes than they purchased, and they are shifting toward build-to-rent projects that increase home inventory rather than competing with traditional homebuyers for existing homes.
All of these strategies are good for young homebuyers, current homeowners, and renters by expanding desirable housing supply and preventing neighborhood blight from distressed homes.
As policymakers craft housing affordability plans, tax policy changes and deregulation should be at the top of their agenda. Congress could spark a home selling wave among existing homeowners, especially Baby Boomers looking to downgrade from their big homes. Updating tax laws to exclude more home sellers’ properties’ gain from taxes will incentivize those who desire to sell but fear a sizeable tax bill. Currently, $250,000 of gain for individuals ($500,000 for married couples filing jointly) can be excluded from taxes when a property is sold. Taken only once every two years, this exclusion exempts the capital gains for a large majority of homeowners. However, these limits were set back when the “Titanic” was released and the average home price was about $154,000.
After nearly 40 years, home prices have skyrocketed over 216%. It’s time for Congress to raise the caps and index them for inflation. The More Homes on the Market Act would double the current exemption to $1 million for couples ($500,000 for individuals) and index these levels for future inflation. First-time buyers would gain access to many more homes, which drives prices down.
Affording a downpayment is still a big hurdle for at least a third of would-be Millennial home buyers. They would benefit from increased resources by cutting taxes and freeing up their investments. Thankfully, the Working Families Tax Cuts (also known as the One Big Beautiful Bill Act) staved off a 20% tax increase and is projected to raise take-home pay by over $10,000 for a family of four. Uncle Sam will no longer take a chunk of overtime earnings and tips—which enterprising men and women can deposit into their home funds.
Congress should also raise Individual Retirement Accounts (IRA) tax-exempt withdrawal limits. The Uplifting First-Time Homebuyers Act would raise the $10,000 cap set back in 1997 to $50,000.
Finally, state and local governments must reform their zoning and permitting laws to ease the time and costs of new home construction and renovations to existing homes to encourage intergenerational living.
2026 already looks promising for the housing market. To juice the market, let’s knock down the barriers keeping Millennial first-time home buyers sidelined and older homeowners locked in place.
