Stalled Housing Market Keeps a Retail Niche Afloat
A key crosscurrent in real estate is quietly shaping retail: the slowdown in home buying. With affordability still stretched and mortgage rates high, more Americans are renting longer—and that’s keeping certain corners of retail, especially those tied to home goods, steady for now. According to Marcus & Millichap, these housing trends have broad implications for both multifamily demand and home-related spending.
Housing markets always move in cycles, and when one sector gains strength, the other tends to ease. Strong homeownership rates are cooling apartment demand, while delayed home purchases or weaker family formation push multifamily occupancy higher. As those housing dynamics shift, retailers feel the effects.
The pullback in home buying has been dramatic. “In 2025, the median age of first-time home buyers reached 40 years old,” said John Chang, chief intelligence & analytics officer, research services at Marcus & Millichap, in a recent video. “Last year, the median was 38, and in 2022, the median age was 36. Historically, from 1993 through 2018, first-time home buyers ranged from 30 to 32 years old.”
Today's older first-time buyers reflect the financial realities that have reshaped housing since the pandemic. Between 2011 and 2022, 30-year mortgage rates typically ranged from 3.5% to 5%, but emergency monetary stimulus in 2020 and 2021 briefly pushed them as low as 2.7%. “Those low interest rates sparked a surge in home buying activity that was dominated by millennials in their 30s who were in their prime family formation years,” Chang said. In 2021, 23% of homebuyers were older millennials, 14% were younger millennials, and the remaining 63% fell into other generational groups.
The result was a frenzy of buying. In late 2020, single-family home sales hit an annualized rate of 5.8 million—the highest since 2006. “All the activity — and availability of capital for mortgage financing — pushed single-family home prices up aggressively,” Chang said. Median home prices jumped from $283,000 in January 2020 to $403,000 in May 2022, a 42% increase in just over two years.
By Freddie Mac’s loan-to-income measures, only about 28% of U.S. households can qualify for the mortgage on a median-priced home, Chang noted. Even those who can often hesitate when faced with the nearly $3,100 mortgage payment, about $1,200 more per month than the average apartment rent.
That financial divide has boosted multifamily demand while slowing ownership. The ripple effects are visible in retail, too. Roughly 7% of the nation’s $732 billion in annual retail sales come from home-related products, including furniture, fixtures, appliances, and home improvement goods. “Now, single-family home sales don’t just impact multifamily rental demand,” said Chang. “It bleeds over into retail real estate as well.”
Despite a more than 20% decline in home purchases since their 2021 peak, the home-focused retail category has held firm. Retail vacancies in the third quarter ranged from 4.5% for grocery-anchored centers to 4.7% for lifestyle and power centers. “So, the elevated cost of houses and the barriers to home ownership will likely be persistent,” Chang said. “That will support demand for apartment rental housing and keep home-related retail sales stable until mortgage rates meaningfully decline. A couple of key considerations for investors who keep their eyes on the horizon.”
Source: GlobeSt/ALM