The U.S. homeownership rate (63.5 percent in Q1) is near its lowest level in nearly five decades and appears to be retreating after a couple of quarters of gains. The millennial generation, which is the demographic that many economists and analysts believe will be the key to increasing the homeownership rate, has generally been slow to buy a home.
Why are millennials not becoming homeowners as quickly as some analysts expected they would? There are different theories.
A study by TransUnion last year  showed that student loan debt was not hampering millennials’ access to credit. Also last year, Freddie Mac released a report  stating that the low homeownership rate among millennials is still “something of a puzzle,” but that it cannot be explained solely by rising student loan debt.
However, a recent survey  from the National Association of Realtors  (NAR) and SALT, a consumer literacy program provided by nonprofit American Student Assistance, found that student loan debt is likely a larger factor in hindering homeownership among millennials that some of the other reports found.
The survey of student debt holders current in their repayment in varying amounts of debt reveals that 43 percent of those polled had between $10,000 and $40,000 in student debt, while 38 percent had $50,000 or more. The most common debt amount was $20,000 to $30,000, according to NAR.
About 79 percent of older millennials (ages 26 to 35) hold the highest amount of debt at $70,000 to $100,000 in total debt, and more than half of non-homeowners in each generation report that it's postponing their ability to buy.
NAR reported that nearly three-quarters of non-homeowners who are current in their repayment of student loans said they believe their debt is what is keeping them from buying a home. More than half of the survey respondents said they believe that the student loan debt will delay them from purchasing a home by more than five years.
“A majority of non-homeowners in the survey earning over $50,000 a year. . .reported that student debt is hurting their ability to save for a down payment.”
Lawrence Yun, Chief Economist, NAR
In addition to those numbers, about 40 percent of respondents said that student loan debt was preventing them from moving out of another family member’s household after college graduation.
It is somewhat ironic that student loan debt would be preventing people from becoming homebuyers, since getting a higher education is intended to promote upward mobility, according to Lawrence Yun, chief economist with NAR.
“A majority of non-homeowners in the survey earning over $50,000 a year—which is above the median U.S. qualifying income needed to buy a single-family home—reported that student debt is hurting their ability to save for a down payment,” Yun said. “Along with rent, a car payment and other large monthly expenses that can squeeze a household's budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go toward saving for a home purchase.”
In late March, the Federal Reserve Bank of St. Louis theorized  that the sharp increase in homeownership in the decade prior to the homeownership rate peak of 69 percent in 2004 played a large role in the declining rate—or in other words, the bursting of the housing bubble and the Great Recession brought on a reversal of the trend of financially weaker families going from rental housing into homeownership in the decade before the bubble.
The St. Louis Fed also reported other possible explanations for the low homeownership rate, including: the possibility that homeownership today is not as attractive as it has been in past decades because of fluctuations in home values, the tightened standards for obtaining a mortgage loan, and the fact that many millennials consider the prospect of being “tied down” to a house and the obligations that come with it less attractive than previous generations.