Buying a starter home in 2026 is equivalent to medaling at the Olympics, at least in terms of how much your parents will brag about it to their friends. That's because becoming someone who doesn't shut up about their HOA a homeowner has become a feat attainable only in The Sims for most young Americans.

Though prices have come down slightly in the past year, the current median home sale price of $405,000 is far above the $329,000 from 2020. And on top of the initial price tag, there's the eye-popping cost of a home loan, which has been driven up by the Federal Reserve hiking interest rates starting in 2022:

• The average US mortgage rate may have dropped below 6% this week for the first time since 2022, but it's still more than double the 2.97% rate in 2021.
• Rising prices and mortgage rates pushed the average monthly mortgage payment to $2,329 in 2025, up from $1,924 two years prior, according to Rocket Homes.

Meanwhile, homeowners who locked in low mortgage rates pre-2022 are now reluctant to list their properties, constraining supply. As a result, prices for preowned homes are elevated, and fewer keys are changing hands. The number of home sale contracts signed last month fell to the lowest point since 2001, per the National Association of Realtors.

Older buyers, smaller homes

Pricier homes mean that by the time Americans have saved up for a down payment, they might need glasses to read the fine print on their mortgage documents: The median age of first-time homebuyers has climbed to 40 in 2025, from 30 in 2010.

While Americans are paying more for homes, they're getting less floor space. The size of an average new home dropped by 11% over the last decade, while the price per square foot rose 74%, according to a recent LendingTree study. Developers are building homes with fewer hallways in order to scrimp on increasingly expensive labor and materials.

Silver linings

But there might be more housewarming parties soon. Mortgage rates have started to come down in recent months, thanks to the Fed slashing interest rates. Economists predict that rates continuing to decline could lead to more homeowners listing their dwellings as they look to move.

And though preowned homes are growing pricier, they're also becoming more affordable for some, as price growth slowed and income growth outpaced home inflation last year. The rate of homeownership by Gen Zers rose by 1 percentage point last year to 27%, per Redfin, driven by new condos becoming more affordable.

But many youths are done chasing the white picket fence dream…instead turning to other ways to grow their piggy banks, like investments in stocks and crypto, particularly by those with spare cash but not enough of it to afford a home.—SK

Just like you when you tan poolside, housing markets often take a dip after getting scorching hot. Many of the regions that enjoyed soaring demand and booming home values during the Covid-19 pandemic are now yelling "cannonball!"

Regions cooling down: The Southeast and Southwest (aka the Sun Belt)—where remote workers and other Covid adapters previously flocked en masse—is now swamped. Some of those markets, especially in Texas and Florida, now have the highest rates of underwater properties, which means an owner owes more on their mortgage than the home is worth. This rate is growing overall, according to data from the Intercontinental Exchange:

• About 2.1% of US homeowners with a mortgage were underwater by the end of 2025, equalling 1.1 million people.
• That's the largest underwater portion of borrowers since 2018, and it represents a 60% increase from the beginning of 2025.

How the pendulum swings: Hot housing markets are dominated by sellers who face overwhelming demand for limited inventory, leading their properties to sell quickly and at a premium. Booming post-pandemic growth started leveling off in 2022, when sky-high inflation triggered higher interest rates (and, by extension, mortgage rates), while construction ramped up to give homebuyers more options—all of which tends to cool a hot market.

Now, many people who bought their homes after 2022 are grappling with the one-two punch of high mortgage rates and falling demand for homes in their areas, potentially leading swaths of underwater sellers to wait on listing their homes rather than selling them for a loss.

On the flip side, underwater mortgages are now less common on the West Coast and in the Northeast and Midwest. Demand is rising, and homes are moving quickly in the latter two areas. The two hottest housing markets in the US last month were Kenosha, Wisconsin, and Hartford, Connecticut, according to Realtor.com.—ML

Buying and selling a home can be a chore, as anyone who's ever posted a picture holding a set of keys with the caption "So, we did a thing!" can attest. Many people have turned to AI to help smooth out the process.

Streamlining search: Rather than clicking through 100 boxes to pick your desired home type, price, square footage, and amenities, you can just ask ChatGPT to "find three-bedroom homes that have been on the market for a while with a fenced-in yard, fireplace, and a dog park nearby."

If you add "Zillow" to the front of your prompt, it will bring up the app and show you photos and maps. Unfortunately, AI still can't tell you whether the neighbors next door raise tarantulas.

Getting down to brass tacks: Once you find a place, AI can help make you aware of potential red flags or determine how much to offer by:

• Pointing out things like old roofs, suspect HVAC systems, and cracks in the drywall.
• Determining how much energy those vaulted ceilings could cost you.
• Translating notes from a home inspection into plain language.

Sellers are getting in on the action, too: Realtors are using generative AI to virtually stage home photos and write property descriptions. There are some horror stories (like AI-hallucinated bathroom demons), but overall, 50% of agents say AI has had at least a moderately positive impact on business, according to a 2025 National Association of Realtors survey.—BC

The high cost of buying a home has helped some reimagine the concept of friends with benefits. Instead of cramming into an overpriced studio rental to save money, buddies are splitting the cost of owning a property they couldn't afford individually.

Zillow reported that US home values skyrocketed 45% between February 2020 and February 2025, which it called "more than a decade's worth of typical growth" in only five years. And the rental market saw a similarly large increase over that time, per Rental Housing Journal, making co-buying a consideration for younger generations.

Per a 2025 FirstHome IQ survey of 1,000 respondents between the ages of 18 and 44:

• Sharing a home with your bestie is particularly appealing to Gen Zers (classified here as ages 18 to 24), as 32% said they would consider co-buying.
• Millennials (ages 25 to 44) aren't against the idea either—18% said they were up for it.

A 2024 report by JW Surety Bonds found that 15% of Americans have made home purchases with a friend or relative, and another 48% would consider doing so.

Home security: Since this isn't the same as roommates splitting the cost of a couch, it's recommended to put the partnership in writing. Two options are a joint tenancy agreement or a tenancy-in-common agreement. These arrangements allow partial ownership of the property (and theoretically, the couch, too) to be sold or inherited if circumstances change.

End of an era? Zillow home trends expert Amanda Pendleton told CNBC that one reason why only 5% of homes were co-bought last year is that rent prices are stabilizing. According to the new Apartment List National Rent Report, the national median rent has fallen for six straight months, not that anyone looking for a place in New York or San Francisco will believe that.—DL

Once upon a time, wealthy Americans may have thirsted for indoor bowling alleys and home theaters with leather recliners, but luxury amenities have gotten an upgrade. Here are a few of the must-haves the affluent are sending to their realtors:

Wellness: Wealthy homeowners are focused on spa-style bathrooms: heated floors, cold plunges, and specialty air and water filtration systems. Saunas are nonnegotiable, with some room-sized built-ins costing homeowners as much as $100,000. And people are still opting for private pickleball courts at their primary residences rather than roughing it at the local country club, a trend that took off during the pandemic.

Getting cozy: A wood-burning fireplace is one of the most sought-after home amenities, according to Zillow, but tightening safety and environmental regulations have prevented them in new builds. Even when they're allowed, finding a mason with the niche skills to build one can be wildly expensive—and maintaining it takes a lot of work. The ultimate baller move is to hire someone else to cut the wood and clean it up so you can keep romanticizing chestnuts roasting on an open fire.

Batten down the hatches: Luxury real estate professionals told Architectural Digest that most high-income buyers are making purchase decisions "through a lens of risk mitigation rather than creative vision." That might help explain the ultrawealthy's heavy investments in security: hidden cameras, motion sensors, strapped security guards, actual moats, and bespoke safe rooms. AI advancements have also made it easier to introduce facial and license plate recognition programs in communities that can afford it.—MM