Over 25 Million Future Homebuyers Remain Sidelined By Housing Affordability
Realtor.com says affordability challenges, limited inventory and elevated housing costs are keeping a record number of potential first-time buyers on the sidelines
A record 25.2 million adults under age 35 lived with their parents in 2025, according to a new report from Realtor.com.
The report found that one in three adults under 35 now lives with a parent, pushing the total number of young adults living at home above even the peak reached during the COVID-19 pandemic. While the co-residence rate of 33% sits just below the all-time high of 33.6% recorded in 2020, the absolute number of adults living with parents has climbed to a new record.
For LOs, the data offers a revealing look at a generation of potential future borrowers who have largely been priced out of homeownership by elevated home prices, high mortgage rates, limited inventory, and rising rents.
"Twenty-five million adults living with their parents represents a generation of latent demand the market hasn't absorbed," said Hannah Jones, senior economist at Realtor.com. "Every adult still in a childhood bedroom is a household not formed, a lease unsigned, a starter home unpurchased. The typical first-time buyer is now 40 — that's not a coincidence, it's the math of a market that hasn't built enough."
The findings suggest the issue is less about employment and more about affordability.
Among adults ages 25 to 34 who live with their parents, roughly 70% are employed, according to the report. Many also hold college degrees. Realtor.com argues the trend reflects housing costs that have outpaced incomes rather than a lack of workforce participation.
"The adults living with their parents today are largely employed, and many hold college degrees," Jones said. "What's holding them back isn't a lack of qualifications, but rather, at least in part, a lack of housing they can actually afford. This is a supply story, not an employment story."
The report points to a national median home listing price of $430,000 in 2025, up 34.4% from 2019 levels, while median asking rents have climbed to $1,673 per month, up 17.9% over the same period. Realtor.com estimates the United States faces a housing deficit of approximately 4 million homes, a shortage that has persisted since the construction slowdown that followed the 2008 financial crisis.
Researchers estimate that if co-residence rates had remained at early-2000s levels, roughly 4.86 million fewer adults ages 18 to 34 would be living with their parents today.
The trend has been building for years.
Co-residence rates rose sharply during the Great Recession and never fully returned to previous levels. A second spike occurred during the pandemic, when economic uncertainty and housing disruptions pushed more young adults back home. While some buyers were able to take advantage of historically low mortgage rates in 2020 and 2021, many younger consumers who came of age after rates began rising in 2022 faced a much different market.
As a result, household formation has been delayed across much of Generation Z and younger millennials.
The report found that nearly 94% of adults ages 25 to 29 living at home have never been married, while nearly one-third hold a bachelor's degree or higher. Among adults ages 30 to 34, co-residence rates have nearly doubled since 2000.
For lenders, those figures may represent future opportunity as much as current frustration.
While elevated rates and affordability pressures continue to suppress first-time buyer activity, the report suggests demand has not disappeared. Instead, millions of potential buyers remain on the sidelines waiting for improved affordability, lower financing costs, greater inventory, or some combination of all three.
The challenge for the mortgage industry is that delayed household formation today can mean delayed purchase volume for years. The opportunity is that those borrowers still exist.
If affordability improves and inventory expands, the industry's next wave of first-time buyers may already be living under their parents' roofs.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing.