Homebuyers are optimistic but hesitant: BMO Real Financial Progress Index

The latest BMO Real Financial Progress Index reveals that most Americans are setting their sights on owning a home – but very few aspiring homeowners are actively in the market, and most plan to only make one purchase in their lifetime. Potential buyers report they are waiting for better rates and trading the “starter home” ideal for a home better suited to all phases of life. 

Homeownership becoming a dream deferred as more buyers sit out the market 

Despite a challenging housing market, Americans’ interest in homeownership remains strong, with nearly three in four (74%) saying that owning a home is a major life aspiration. But even as more Americans dream of signing the deed, buying activity has dipped slightly: just 14% of Americans plan to purchase within the next year, compared to 17% who said the same in 2025.  

Despite recent mortgage rate reductions, many Americans remain on the sidelines, with just 17% of buyers saying they started house hunting due to recent interest rate cuts, and a majority (51%) waiting for rates to come down further. 

"The American dream of owning a home is still alive and well, even if the market is presenting challenges that require new financial strategies for many to achieve this dream. When prices and rates are high, your best offense is a good defense: a smart budget and a financial partner who can help review your full financial picture to help you secure the best terms within your means so that you can get those keys in hand."

- Paul Dilda, Head of U.S. Consumer Strategy at BMO 

Age of the average first-time homebuyer rises to 40  

The delay is part of a larger pattern, as Americans are now buying their first homes later in life. The average expected age of a first-home purchase is now 40, and a quarter of Gen Z and Millennials expect to be older than that before they buy their first home.  

According to the National Association of Realtors, in the early 1990s, the average first-time buyer was 28 years old — pointing to a 12-year leap in the expected average homeownership age over the last three decades.  

A desire for a forever home 

Many buyers are purchasing their first home only after starting a family. Two in five non-homeowners on the market have at least one child. 

With this milestone arriving later in life for many, 65% of prospective homebuyers expect their first purchase to be their “forever home” – a common view among house-hunting Millennials (67%). 

Americans remain resolute in their rejection of the starter home: 58% who don’t own a home say that buying a smaller house and then upgrading to a bigger one simply “makes no sense these days,” consistent with last year. 

“With more first-time homebuyers entering the market later in life, they are no longer looking for a starter home, but rather a house that matches their life stage and family needs.” 

- Paul Dilda, Head of U.S. Consumer Strategy at BMO  

House hunting for a home that can serve multiple purposes 

• Return of the mother-in-law suite: With 54% of Millennials and 41% of Gen Z identifying as “sandwich generation,” squeezed by caregiving responsibilities for both aging parents and young children, younger generations are prioritizing family in the home search. Two in three (66%) Millennial homeowners say it was important to own a home in order to offer space to their parents or grandparents in the future; 75% of Gen Z agreed.  
• Active housework, passive income: Many young homeowners are looking for ways to make more money off their property: 60% of Gen Z and Millennial homeowners plan to invest in extra space to generate additional income via either vacation or long-term rentals. 

Obstacles to homeownership: Caregiving, retirement, climate and more 

Over half (55%) of non-homeowners say that the dream of buying a house feels unattainable in their lifetime. 

Pessimism extends even to young Americans earning six figures: Half (48%) of renters under 40 who bring home at least $100,000 a year are less confident about owning a home in their lifetime than they were five years ago. 

Some common competing priorities and challenges for aspiring homeowners include: 

• Sandwich generation caregiving: Three in four (76%) sandwich generation Americans say housing costs cause financial anxiety, compared to 60% without dual caregiving duties. Relatedly, 69% of this cohort says that saving for their child’s education or childcare costs is a higher priority than buying a house, and around half (48%) say the same of providing for parents or other family members.  
• Nest vs. nest egg: While 44% of prospective homebuyers would consider dipping into retirement savings to fund a down payment, 52% of Americans who don’t yet own a home prioritize saving for their golden years ahead of buying a house. 
• Insurance challenges: 56% say that home insurance costs and availability may impact their ability to buy or keep a home. 
• Climate concerns: Americans are also worried natural disaster risks, with 56% saying storms, wildfires and heatwaves will impact where they choose to buy. 

Young prospective buyers look to co-purchasing, remote work and family loans 

Against this backdrop, the data shows young buyers are getting creative with housing hacks to bring homeownership within reach:   

• Embrace the mega commute: 55% of prospective buyers would consider a 60-minute commute to afford a dream house, while 64% of Gen Z and 56% of Millennial buyers are willing to accept a long commute for their dream house.  
• Move to a Zoom town: 83% of Gen Z and 87% of Millennial house hunters would move to a more affordable housing market if their work allowed them to work from anywhere.   
• Co-buy with a friend (or grandparent): Half (49%) of prospective buyers would consider purchasing a home with friends or family, including 59% of Gen Zers who intend to buy a home in the next two years. In parallel, 65% of Gen Z buyers and 47% of Millennial buyers would lower housing expenses by bunking with grandparents or parents and making housing costs a family affair. 
• Ask AI: 72% of homebuyers say they will use AI in some capacity on their path to homeownership. Top three AI uses include learning about mortgage options and interest rates (38%), calculating how much to spend on a home comfortably (35%) and better understanding legal or regulatory requirements (32%). 
• Get outta town: 65% of Gen Z buyers and 62% of Millennial buyers would be willing to move to a new state or even country to afford a space. 
• The bank of Mom & Dad: 53% of current Gen Z and Millennial homeowners could not have purchased without assistance from family  

Making real financial progress on the path to homeownership 

Regardless of where buyers are on their homeownership journey, BMO offers tools and guidance to help consumers prepare to close on that dream home: 

• Calculate costs and set a goal: To understand the cost of a forever home, BMO offers calculators to help customers estimate a number of housing expenses, including mortgage affordability, Mortgage Down Payment and Rent vs Own. Build a budget and start saving: For those starting to save for their dream house, the BMO Real Financial Progress Hub digital resource allows customers to build a budget and easily access personal finance advice and guidance, as well as tools and resources to reach their own specific financial goals. 
• Take advantage of first-time homebuyer programs: In certain markets, first-time homebuyers might be eligible for programs like the BMO Welcome Home Grant Program. 
• Meet with a financial specialist: Speaking with a professional can help people prepare for life’s major financial decisions. BMO clients can meet with our financial specialists to review their full financial picture and understand how to achieve home-buying goals with confidence. 
• Innovation can be a guide: Coming soon, the DollarGPS app gives users the equivalent of a navigation system, a powerful tool that can facilitate optimal financial decision-making. 

To learn more about how BMO can help aspiring homeowners make real financial progress, visit BMO.com