Here’s a look at some of the ways that home buying is becoming more difficult for young buyers:

1. More deals are falling through. The share of home sales that fail is on the rise, with more issues arising for people buying starter homes, according to a report released this week by Trulia. About 4 percent of sales for listed homes failed at the end of last year, meaning the homes went from being listed for sale to pending and back to being on sale. That is up from about 1 percent in 2014, according to the report. The fail rate was higher for starter homes, with 7 percent of deals falling through at the end of 2016.

AD

AD

Home sales typically fall apart if buyers face issues with financing or if they find major issues with the structure of the home, says Felipe Chacón, a housing data analyst for Trulia. New home buyers are more likely to face issues with their loans because they haven’t gone through the process and usually don’t have as much equity as older borrowers, Chacón says. They are also more likely to be buying homes with loans secured by the Federal Housing Administration, which require smaller down payments but have more restrictions, he says.

2. They don’t have many options. One of the main challenges affecting all kinds of home buyers is that there is a shortage of homes on the market. Still, those shortages are growing most for low- and midpriced homes in many markets, according to Trulia. Inventory for starter homes fell by nearly 11 percent nationally at the end of last year when compared to the end of 2015, the company found. That compares to a drop of 6.5 percent for premium homes, or the priciest homes in the market.

When inventory is low, buyers can have a tough time finding a home they can afford or that has the features they’re looking for. And when they do find a home they like, they can face strong competition from other buyers, says Jeremy Wacksman, chief marketing officer for Zillow. That can mean having to rent for a longer time, he says. Other people may feel pressure to move quickly or to make a bigger offer.

AD

AD

3. More people are being priced out of the market. Mortgage rates have increased since the election, putting a squeeze on young home buyers. Rates for 30-year fixed-rate mortgages rose to 4.2 percent last week from about 3.4 percent at the beginning of October. Those higher mortgage rates pushed down the median mortgage that millennials can afford by 9 percent, according to a report released Thursday by Fitch Ratings.

It also doesn’t help that the list prices for starter homes are rising, according to Trulia, requiring bigger down payments. For aspiring buyers, that can mean having to move to a less-expensive area, or putting off the purchase until they have more cash in the bank.