I’ve often marveled at people I know when they announce they’re buying their first home. How do they afford it?
I have reported on the housing market for years. I’ve spent countless hours covering the costs of buying a house, the various expenses that make up monthly payments, and the barriers facing first-time homebuyers specifically.
I also bought my first home in 2022. The financial, mental, and emotional toll it took on me cannot be overstated.
So, when I balk at first-time homebuyers who are actually able to afford a house, it isn’t coming from a place of ignorance. It’s that I know to my core just how difficult it can be.
How are first-timers affording houses in the 2026 housing market? The National Association of Realtors (NAR) has discovered a major trend for hopeful homebuyers: They’re moving back in with their parents.
The share of young adults living at home is at 22%
Millennial and Gen Z adults have long been scrutinized by older generations for moving back in with their parents rather than embracing independence and living on their own.
Some may see it as laziness or codependence. But Jessica Lautz, NAR deputy chief economist and vice president of research, says it’s actually a strategy to help them afford their own homes later.
“We’ve actually seen the share of young adults who have moved home and lived with family before purchasing their first residence is now at 22%,” Lautz says in an NAR Ask the Economist video from Aug. 4.
Related: Boomers have unfair edge over younger homebuyers
“It’s near double what we saw in the 1990s,” she continues.
Home prices spiked during the Covid pandemic. Although home price growth is cooling, those higher costs still linger in the housing market. Rents are also high.
So when a young adult is paying for rent, it can be difficult — and that’s putting it lightly — for them to afford to save up for a down payment on a house. Especially when they have limited income and other debts to pay down.
Would-be homebuyers face high living costs
As of Aug. 2, 2026, the average rent in the U.S. was $2,022, according to Zillow Rentals Data. The average monthly rent for a studio apartment was $1,495, and it was $1,525 for a one-bedroom apartment.
(I’ve also had to pay above the national average rent payment on more than one occasion. It’s rough out there, guys.)
Student loan debt is also a common monthly expense for young adults. The average amount borrowed by those earning a bachelor’s degree in the 2023-24 school year was $29,560, according to the College Board.
Millennials with car loans owe an average of $22,627, according to LendingTree data.
More Housing Market:
- How the South became America’s biggest buyer’s market
- Fewer foreign homebuyers won’t fix U.S. affordability
- Is the American starter home officially dead?
Young adults are facing high monthly debt and living costs. Meanwhile, there’s a delicate dance between wage growth and inflation. Nationally, the two have pretty much merged, as of the time of writing. But this also depends on various factors, such as location and job sector.
Even with the two keeping pace, it isn’t easy for young people to make financial progress toward saving for a home when they have other high monthly payments.
Lautz notes that moving back home isn’t ideal for everyone. For some, it isn’t even an option.
But for those willing and able to do so, it can make a major difference in their home-buying timeline.
How living at home fixes your DTI ratio
Yes, living at home to save on rent can help you save for a down payment. But that’s not the only way it helps you reach your homeownership goal.
Lautz also notes that you could also use that savings to pay down your debts faster, which lowers your debt-to-income ratio (DTI).
Your DTI ratio is one of the main factors mortgage lenders evaluate when deciding whether to approve you for a mortgage — and if they do approve your application, it helps them determine how much they’ll lend and what interest rate they’ll offer.
What is a DTI ratio? It’s your minimum monthly debt payments (including your proposed mortgage payment) divided by your gross monthly income.
For example, let’s say you owe $500 per month for student loans and $300 on an auto loan. And if you apply for a mortgage that would result in a $1,500 monthly payment, you would add all three for a total monthly debt payment of $2,300.
Now let’s say your monthly gross income is $5,000. Divide $2,300 by $5,000, and your DTI ratio is 46%.
Most mortgage lenders prefer your DTI ratio to be 36% or lower (although it depends on the type of loan and the rest of your financial profile).
By moving in with your family and spending less or no money on rent, you could pay down debts, lower your DTI ratio, and save for a down payment. All of this would put you in a strong position to buy a house sooner rather than later.
