Only 28% of Americans who planned to buy a home in 2024 actually did—young buyers feel 'trapped between a rock and a hard place'

Last year proved challenging for homebuyers, with only 28% of those planning to purchase a home successfully doing so, according to a new survey by NerdWallet.

Rising home prices, selected by 18% of respondents, was the most-cited challenge. That's perhaps not surprising considering prices have surged 33% since 2020, further squeezing buyers already contending with mortgage rates that have doubled to over 6% in that time.

Potential buyers were also derailed by a historically tight housing market that has limited the supply of homes, the survey finds, with other top reasons including failed offers, difficulty finding suitable homes, high mortgage rates, trouble qualifying for loans and the rising cost of insurance.

"The biggest issue is that not enough homes are for sale," says Holden Lewis, a mortgage expert at NerdWallet. "The low inventory pushes prices upward as buyers compete with one another."

The combination of rising home prices and increasing mortgage rates has forced many Americans to set budgets far below what's typically sold in today's market. On average, survey respondents planned to spend a median of $150,000 on a home — a figure that falls significantly short of the national median sales price of $420,400, according to the most recent U.S. Census data.

This can make it harder for first-time buyers to compete with wealthier buyers when bidding on homes.

"I have worked with millennials who feel trapped between a rock and a hard place," says Andrew Herzog, a certified financial planner in Texas. "More often than not, I've simply advised people to prolong their search, while still saving for an emergency fund and retirement. Most everyone realizes mortgage rates are unlikely to bottom around 3% again, so this is the new norm for homeownership pursuit."

Renters in particular "face escalating costs that often leave little room for discretionary savings, making it harder to accumulate the funds needed for a down payment," says MaryAnne Gucciardi, a CFP in Cambridge, Massachusetts.

"In contrast, homeowners benefit from equity and locked-in, lower mortgage rates, which shield them from similar challenges," she adds.

These challenges contributed to the sharp decline in first-time buyers, who made up just 24% of home purchases last year — the smallest share since the National Association of Realtors began tracking the data in 1981.

A lack of affordability is also why 2024 was one of the most lackluster years for home sales in decades, according to NAR data. The issue hasn't been a lack of demand, but rather the rising costs that have priced out countless would-be buyers who can no longer afford to finance a median-priced home.

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