By virtue of sheer numbers, millennials are defining the trends of today’s housing market. The age group now accounts for 43% of all homebuyers so far in 2022, according to a new report by the National Association of Realtors. 

There are now more millennials—defined by the NAR as being born between 1980 and 1998—buying homes than any other generation, and their share of the homebuying market is only growing, up from 37% last year.

Older millennials, born before 1989, make up a larger share of new homeowners than younger members of their cohort. These older homebuyers appear to have utilized opportunities afforded to them by the last two pandemic years to save up money and enter the housing market.

“Some young adults have used the pandemic to their financial advantage by paying down debt and cutting the cost of rent by moving in with family. They are now jumping headfirst into homeownership,” Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said in a statement accompanying the report.

But as millennials begin to contemplate taking the leap into homeownership, they are also being confronted with one of the most competitive, expensive, and unforgiving housing markets of recent times. 

A historic housing crunch

Millennials are entering the real estate market at a time of historically low housing supply and high competition that has sent home prices soaring.

Housing prices have risen by nearly 20% over the past year—a record high well above the 14% year-over-year increase in home prices that was recorded shortly before the 2008 housing burst, with even more home price growth expected to hit over the next few months before cooling.

A low supply of available housing influenced by inflation and supply-chain issues has coincided with a record demand for new houses, as low mortgage rates and pandemic-era remote work options drew more potential homeseekers into the market. This fervent competition has led to the spike in prices homebuyers are currently contending with—and despite their large cohort, millennials have drawn the short end of the stick.

An intergenerational housing war

The second-largest homebuying demographic behind millennials, with a share of 29%, are baby boomers, according to the NAR report. But while Gen Xers and some younger boomers are hunting for larger family houses, baby boomers looking to downsize and millennials buying their starters seem to be searching for the same thing: similarly sized and priced suburban homes. 

This usually wouldn’t be a problem, but given the supply crunch of housing and the sheer number of millennials entering the housing market, it has become one.

Boomers have been pricing millennials out of the housing market for months—and ironically, a big reason behind the gap is the wealth boomers have been able to build from owning real estate. A recent study by credit building company Self Financial found that the average net worth of baby boomers absolutely dwarfed that of millennials, with the gap in real estate assets alone standing at over $11 trillion.

There might still be hope for millennial homebuyers, as some housing markets have shown to be much more welcoming than others. A February study by online loan operator Lending Tree found that in Denver, Seattle, and Boston, over 60% of mortgages were offered to millennials. And in up-and-coming inland population and job hubs like Salt Lake City and Phoenix, lenders and sellers were especially welcoming to millennials in their late 20s and early 30s.