NEW YORK (MainStreet) -- There is some good news on the home-buying front, but there’s one key consumer demographic that seems to be missing in action: young people.

According to Realtor.org, home sales are on the mend, up 7.7% from July to August. Better yet, new home sales were up 18% on a year-to-year basis, the organization reports.

“Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” says Lawrence Yun, NAR’s chief economist. “Investors were more active in absorbing foreclosed properties. In addition to bargain hunting, some investors are in the market to hedge against higher inflation.”

But not everyone is able to get in on the fun. A new University of Iowa study shows that younger Americans are increasingly walled off from homeownership.

The study says that 20- and even 30- and 40-somethings have suffered disproportionately in the economic downturn, and can’t get the financing or are too worried about money to gather up the financial resources needed to buy a new home.

The data was compiled by University of Iowa economics professor Martin Gervais at the Tippie College of Business. He says that homeownership among the nation’s younger consumers was already in decline since 1980 (Gervais defines “younger” consumers as the 25-44 age group).

Only 57% of that demographic owned their own home in 2007, and that’s down from 61% in 1980. Gervais estimates that number is “even lower today”.
The report states that the “malaise in homeownership” comes despite aggressive efforts by the government to steer younger Americans into new homes. The data cites three efforts in particular: Low interest rates by the Federal Reserve, low down-payment requirements from mortgage lenders and the myriad government programs from Fannie Mae (Stock Quote: FNM), Freddie Mac (Stock Quote: FRE), and the Federal Housing Administration to assist first-time homebuyers.

Despite those efforts, the study notes, fewer young people have wound up as homeowners.

What’s holding them back? Gervais, along with co-author Jonas D.M. Fisher of the Federal Reserve Bank of Chicago, cites a “general economic uncertainty” among the younger set, along with a decline in marriages among young Americans, denying them the two incomes often needed to afford a new home. The study notes that marriage has declined by 15% among the 25-44 demographic between 1980 and 2000, and those numbers should continue to fall. 

Above all, younger Americans just don’t want the risk associated with such a large asset, the study says.

"If you have a lot of risk, you don't want to lock yourself into an asset that is not liquid," Gervais says. "Instead, they wait until they have more wealth so they can better absorb wage shocks. Sometimes that means delaying a purchase until they're significantly older, or maybe they just keep renting."

The study, entitled "Why Has Home Ownership Fallen Among the Young?" was recently published in the International Economic Review. Find it here.