More evidence student debt is a drag on US homeownership rates

Typical millennial's debt exceeds annual income

New research finds that many millennials who want to buy a home simply can't -- they carry too much student-loan debt.

Since hitting a 50-year low in 2016, the homeownership rate in the U.S. has ticked up to 63.7 percent, with the biggest gains in the last year among homebuyers 35 and younger, known as millennials.

But new data from the National Association of Realtors shows that many millennials who want to buy a home simply can't -- they carry too much student-loan debt.

A survey of student-loan borrowers between the ages of 22 and 35 found that nearly three-quarters don't feel financially secure enough to purchase a home; and more than half -- 52 percent -- say they can't qualify for a mortgage because their income-to-debt ratios are too high.

"The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost," Lawrence Yun, NAR's chief economist, said. “Sales to first-time buyers have been underwhelming for several years now, and this survey indicates student debt is a big part of the blame." 

The survey, which the NAR conducted with the nonprofit American Student Assistance, found that the typical millennial owes more in student debt, about $41,200, than his or her median salary of $38,800. Monthly loan payments, which can run several hundred dollars, make it harder to save for a down payment or qualify for a mortgage and force many millennials to put off other big financial decisions like getting married and planning for retirement.

Younger millennials -- those born between 1990 and 1998 -- expect student obligations to delay homeownership more than three years. And the higher the debt, the longer the delay -- eight years in the case of borrowers who owe between $30,000 and $50,000 and more than $70,000.

Student debt has also prevented many millennials from living on their own, according to the survey. One in seven live with friends or family and do not pay rent. Another 22 percent said they remained in a family member’s home for two years after college because of student debt. 

Danielle Hale, the chief economist for, says the decision to borrow for school, while necessary in many cases, can have life-long ripple effects.

"While in general, workers with a college degree earn higher incomes and have higher homeownership rates, these survey results suggest those borrowing for college need help understanding the costs of college and consequences of debt," Hale says.

The NRA/ASA report is consistent with other research that suggests student-loan debt is a significant drag on the homeownership rate and the overall economy.  

A study released in July by the Federal Reserve Bank of New York reported that in 2007, on the eve of the Great Recession, almost one in three people in their 20s owned a home. By 2016, it was one in five. 

About 35 percent of that decline can be blamed on student-loan debt, according to the report, which estimated that for every $10,000 in debt, the probability of owning a home by age 30 falls by 1.5 percentage points.