Key facts
- Generation Z accounted for a record 20% of home purchase rate locks in the second quarter.
- Gen Z now represents nearly one-third of all first-time homebuyer loans.
- Home prices showed annual appreciation accelerating for a fourth straight month to 1.3% in June.
- The national mortgage delinquency rate rose 15 basis points to 3.5% in May.
- Active foreclosure inventory climbed to roughly 280,000 loans, up 34% from May 2025.
Generation Z has captured a record 20% of home purchase mortgage rate locks in the second quarter, signaling a significant generational shift in the housing market, according to Intercontinental Exchange (ICE) data. This demographic now constitutes nearly one-third of all first-time homebuyer loans and 27% of FHA purchase mortgages.
Despite facing affordability challenges, Gen Z's increasing market share is expected to continue as the oldest members approach age 29. Together, Gen Z and millennials represent nearly two-thirds of the purchase lending market, highlighting the dominance of younger, tech-savvy generations. In contrast, baby boomers accounted for 11% of purchase lending but a larger share of cash-out refinances.
Affordability pressures are leading buyers to seek alternative down payment sources, with 29% utilizing family gifts, loans, or retirement savings, the highest rate in seven years. Gen Z buyers frequently used family gifts (13%) or loans (8%), while boomers were more inclined to use retirement savings.
Home prices continued to strengthen, with annual appreciation accelerating to 1.3% in June, the highest rate in over a year. Seventy-two percent of housing markets saw price increases compared to the previous year, and nearly 87% are experiencing accelerating growth. Single-family homes outperformed condominiums, with prices rising 1.6% annually versus a 0.8% decline for condos.
Mortgage performance data indicated a national delinquency rate increase to 3.5% in May, largely attributed to a calendar timing effect. However, more serious mortgage distress is building, with loans 90 days or more delinquent or in foreclosure increasing by 185,000 year-over-year, concentrated among FHA loans. Foreclosure starts declined month-over-month but remained higher than the previous year, and active foreclosure inventory reached a six-year high.