For much of our history, American exceptionalism has furthered access to homeownership.
The unusual power of Americans to self-incorporate as municipalities and to tax themselves to fund local infrastructure encouraged the growth of communities throughout America. After World War II, states legislated for and localities implemented master land-use plans that created an economic boom without rising home prices. We became a nation of homeowners as the homeownership rate went from less than half to two-thirds of American households. Although lagging behind other groups, a majority of minority households also became homeowners by the end of the 20th century. Nearly 90% of Americans achieved the American Dream of homeownership at some point in their lifetimes. Young people became independent at a young age, typically starting their own households by their thirties. In the 20th century, the American Dream entailed a familiar sequence: finish school, find a job, get married, buy a home, raise a family. For most, affordable housing near a job that paid for the housing was the achievable American Dream.
In the 21st century, affordability has taken a turn for the worse — far worse — in the years since 2022. Housing costs for new home buyers have more than doubled. Mortgage rates went from 3% to 6%, and housing prices rose by 40%. The result is the Great Postponement — not only of homeownership, but of other key life markers.
The Great Postponement
The postponement is visible across nearly every major milestone. One out of three young adults ages 24-35 are living with their parents, as of the most recent data — a return to the historic high point during the pandemic and earlier during the Great Depression. Americans are marrying far later than previous generations. They are having children later. The median age at first marriage has risen by nearly a decade since the 1970s, and the average age at first birth continues to increase. Just a generation ago, becoming a first-time parent after age 30 was often viewed as unusually late. Today, it has become increasingly common. This shift reflects not only economic constraints but also expanded educational and career opportunities for women, who are increasingly choosing to delay marriage and childbearing. Despite these new opportunities, heightened affordability constraints are real.
Despite widespread concern about housing affordability, Americans have not abandoned the dream of homeownership. Two hundred and fifty years after American independence, belief in the American Dream remains remarkably resilient: a study by Gallup reveals that 76% of Americans believe the American Dream is achievable. A Pew study shows that 67% of Americans say they have, or believe they will, achieve the American Dream personally.
Housing is a central part of this broader story, but it is a changing part. High home prices and elevated mortgage rates have combined to make entry into homeownership substantially more difficult than it was for previous generations. For many young adults, buying a first home is no longer the first step toward financial security but the reward after years of saving, career advancement, and often family assistance.
Despite widespread concern about housing affordability, Americans have not abandoned the dream of homeownership.
The Growing Divide
Research documents an important consequence of these changing economics. Parents are playing a larger role in helping their adult children navigate today’s housing market, whether by providing financial assistance, supporting longer periods of coresidence, or transferring wealth that facilitates a home purchase.
This growing reliance on family resources has two very different implications.
On one hand, it reflects an encouraging reality. Many American families have accumulated significant wealth over recent decades and are using it to invest in the next generation. Intergenerational support can smooth the transition into adulthood and ultimately make homeownership attainable.
On the other hand, not every family has resources to share.
The result is an increasingly “K-shaped” economy, where young adults with access to parental wealth continue progressing toward homeownership, while equally capable peers without those resources face much steeper obstacles. Opportunity increasingly depends not only on individual effort but also on family resources.
Housing markets themselves have also changed dramatically.
Historically, the United States stood apart from many advanced economies because housing remained comparatively affordable. Home prices were often about three times household income, allowing steady pathways into ownership for middle-income families. Today, in many markets, that ratio has roughly doubled. Although the United States remains more affordable than most other countries where price-to-income ratios often exceed 10, the deterioration has been substantial by American standards. Higher housing prices relative to income together with higher mortgage rates yield mortgage payments relative to income that preclude homeownership for many.
Even markets long known for affordability have become expensive. Texas, for decades a symbol of abundant housing and relatively low prices, has experienced sharp rises in home values as population growth has outpaced new construction in major metropolitan areas, new burgeoning suburbs, and even in the previously thought of as inaccessible Hill Country. Similar patterns have emerged across much of the country.
The question is whether our housing policies can evolve quickly enough to ensure that achieving the American Dream depends once again on opportunity and hard work rather than circumstances of one’s birth.
Restoring the Path to Homeownership
The good news is that this challenge is not insurmountable.
Unlike many economic problems, housing affordability is shaped as much by policy as by markets. While individuals can postpone purchases or save longer, lasting improvements depend on collective action.
Lower mortgage rates, as inflation and interest rates fall, will reduce monthly borrowing costs. Yet lower rates alone will not solve the problem. Indeed, history suggests they may stimulate demand and place additional upward pressure on home prices unless housing supply expands.
That makes supply the central challenge. Perhaps surprisingly, this is a more complicated issue than often assumed. New multi-family housing construction, particularly in the Sunbelt, surged supply, with market rate rents declining as a result. Housing prices, on average for the nation, are flat and, after adjusting for inflation, also in decline. Yet affordability remains a problem, and that is because the issue is the availability and cost of starter homes that are affordable for young families.
Encouragingly, many states have begun to act. Reforms to zoning, permitting, accessory dwelling units, higher-density development, and infrastructure investments are intended to allow more affordable housing where demand is strongest. While these efforts differ across states and will take time to affect prices, they represent an important recognition that expanding supply is essential to restoring affordability. The Renewing Opportunity in the American Dream to Housing Act of 2025 encourages local affordable housing pilot programs. The issue is bringing these to scale. We need collective policy action on a state and local level to provide housing at price points that are affordable for young households.
The American Dream has always evolved alongside economic change. Today’s young adults are reaching their milestones later than previous generations, but they have not given up on them. Homeownership remains a defining aspiration for most Americans.
The question is not whether the dream survives — it does. The question is whether our housing policies can evolve quickly enough to ensure that achieving the American Dream depends once again on opportunity and hard work rather than circumstances of one’s birth.
