For many workers in the United States (and around the world for that matter), the American Dream is a beacon of hope: The idea that anyone, regardless of social class or where they were born, can prosper and succeed if they work hard enough.
Susan Wachter is a professor of real estate and finance at the Wharton School of the University of Pennsylvania, and in an article published yesterday, she evaluated how the American Dream is faring as the U.S. turns 250 years old.
Prof. Wachter writes that “in the 20th century, the American Dream entailed a familiar sequence: finish school, find a job, get married, buy a home, raise a family … In the 21st century, affordability has taken a turn for the worse—far worse—in the years since 2022. Housing costs for new home buyers have more than doubled. Mortgage rates went from 3% to 6%, and housing prices rose by 40%.
“The result is the Great Postponement—not only of homeownership, but of other key life markers.”
Evidence of this “postponement” can be found across a range of milestones, Prof. Wachter says. According to a June study by Realtor.com, a record 25.2 million adults under 35 were still living with their parents in 2025—nearly one in three. Perhaps more surprising is that the vast majority—70%—were employed, a share that has held steady, meaning co-residency is climbing due to growth in adults with steady jobs rather than those looking for work.
Other milestones are also moving back: The Census Bureau reported in December that the estimated median age at first marriage increased to 30.8 for men and 28.4 for women, up from ages 23.5 and 21.1, respectively, in 1975. Likewise, a 2025 report published in the National Library of Medicine noted the mean age of mothers at first birth increased 0.9 years, from 26.6 in 2016 to 27.5 in 2023.
Of course, the motivation behind the shift isn’t purely economic. Prof. Wachter points out that it also occurs due to “expanded educational and career opportunities for women, who are increasingly choosing to delay marriage and childbearing.”
Homeownership, however, is largely a question of finances. A decade ago, according to Freddie Mac data, 30-year mortgage rates were 3.45%. Skip to 2026, and that rate is now 6.58%.
As well as mortgages being higher, house prices have become less accessible: The National Association of Realtors publishes a housing affordability index, with a reading of above 100 meaning a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. In 2023, that index was just shy of 97, meaning the mean family could afford a home.
By May of this year (the most recent confirmed data on the index), the index had risen to 105.1—meaning most families couldn’t afford to buy a home.
“For many young adults, buying a first home is no longer the first step toward financial security but the reward after years of saving, career advancement, and often family assistance,” Wachter says.
Family finances
With the Great Wealth Transfer scheduled to get underway in the next few decades, younger generations could be forgiven for thinking a windfall might be coming their way.
However, “not every family has resources to share,” Wachter says.
“The result is an increasingly ‘K-shaped’ economy, where young adults with access to parental wealth continue progressing toward homeownership, while equally capable peers without those resources face much steeper obstacles,” she writes. “Opportunity increasingly depends not only on individual effort but also on family resources.”
Several new policies are being enacted to support individuals without family money to get onto the housing ladder, opening up the possibility of the American Dream for more people. The 21st Century Road to Housing Act, passed this year, is one example and includes a number of proposals to increase housing supply and expand access to affordable housing.
However, Wachter adds: “The question is whether our housing policies can evolve quickly enough to ensure that achieving the American Dream depends once again on opportunity and hard work rather than circumstances of one’s birth.”
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