Generation Z accounted for a record 20% of home purchase rate locks in the second quarter, marking the largest share on record as younger buyers continue to gain ground despite ongoing affordability challenges, according to Intercontinental Exchange (ICE)’s July 2026 Mortgage Monitor.

The report, released Monday, found that Gen Z now represents nearly one-third of all first-time homebuyer loans and 27% of Federal Housing Administration (FHA) purchase mortgages. As the oldest members of the generation approaching age 29, ICE said Gen Z’s share of the home purchase market is expected to continue growing.

“Gen Z’s rise to nearly 20% of rate locks is one of the clearest signs yet of a generational handoff in the homebuying market,” Andy Walden, ICE’s head of mortgage and housing market research, said in a statement. “Despite facing one of the tougher affordability environments in decades, younger buyers are finding ways to become homeowners.”

The report offered a glimpse into generational homebuying trends. “Together, Gen Z and millennials account for nearly two-thirds of the 2026 purchase lending market — a clear sign that younger, more tech-savvy generations now dominate purchase mortgage lending,” the report noted.

In contrast, baby boomers made up just 11% of purchase lending but accounted for 31% of cash-out refinance activity. ICE said boomers also carried higher debt-to-income ratios on cash-out refinances than other generations, suggesting some borrowers are stretching their budgets to access home equity accumulated during recent home price gains.

Affordability pressures are also prompting buyers to seek alternative funding sources for down payments. While 71% of homebuyers relied on personal savings, 29% used other sources such as family gifts, loans or retirement savings, the highest share in seven years.

Among Gen Z buyers, 13% relied on a family gift and 8% used a loan to fund their down payment. Baby boomers were more likely than any other generation to use retirement savings.

“For lenders and servicers, the generational shift in the borrower base is more than a demographic footnote, it’s a competitive inflection point,” said Bob Hart, president of ICE Mortgage Technology. “As Gen Z enters the market in force, organizations that have modernized their technology stack and customer engagement capabilities will be far better positioned to serve the next wave of homebuyers.”

Home prices also continued to strengthen. ICE’s Home Price Index showed annual appreciation accelerated for a fourth straight month to 1.3% in June, the strongest annual growth rate in more than a year.

On a seasonally adjusted basis, prices rose 0.29% for the month, matching the average pace of the previous three months despite higher mortgage rates.

The report found that 72% of housing markets posted higher home prices than a year earlier — the largest share in more than a year — while 91% recorded seasonally adjusted price gains in June. ICE said nearly 87% of markets are experiencing accelerating price growth, putting annual appreciation on pace to exceed 3% by the end of the year if current trends continue.

Single-family homes continued to outperform condominiums, with single-family prices rising 1.6% annually while condo prices declined 0.8%. Nearly all major markets continued to show weaker condo price performance than single-family homes.

Among major metropolitan areas, Rochester, New York, posted the strongest annual home price growth at 7.3%, followed by the Connecticut metros of Hartford and Bridgeport at 6.2% each.

Price momentum has been strongest across parts of the South and Midwest, including Louisville, Kentucky; Miami; Jacksonville, Florida; Knoxville, Tennessee; Tampa; and Memphis, Tennessee; while Southern California markets such as Los Angeles, Riverside and Oxnard remained largely flat. Home prices also edged lower in Honolulu and Denver.

Despite strengthening home prices, inventory has continued to increase, which ICE said could moderate appreciation in the months ahead.

Mortgage delinquencies build

Separately, mortgage performance data showed the national delinquency rate rose 15 basis points to 3.5% in May. ICE said the increase was largely driven by the calendar, as May 31 fell on a Sunday, delaying the processing of scheduled mortgage payments into June. Similar month-end timing effects occurred in 2009 and 2015, producing nearly identical increases in early-stage delinquencies.

The report noted that while the rise in early-stage delinquencies was largely a timing issue, more serious mortgage distress continues to build. The number of loans at least 90 days delinquent or in active foreclosure increased by 185,000 from a year earlier, the largest annual increase since the pandemic-driven spike in 2020.

The increase continues to be concentrated among FHA loans. The share of FHA mortgages that were seriously delinquent or in active foreclosure rose 1.9 percentage points from a year ago. Department of Veterans Affairs (VA) loans saw a smaller increase, while conventional and portfolio loans were flat to slightly lower.

Foreclosure starts declined 9% from April to about 33,000 in May, the lowest monthly level since November 2025, although they remained 19% higher than a year earlier. Active foreclosure inventory climbed to roughly 280,000 loans, up 34% from May 2025 and the highest level in six years after increasing in nine of the past 10 months.

ICE also found that mortgages originated in 2022 or later account for a growing share of foreclosure activity, representing 39% of foreclosure starts, 34% of active foreclosure inventory and 43% of foreclosure sales.

The report noted that borrowers who purchased homes during the higher-rate environment with limited subsequent home price appreciation are becoming a larger portion of distressed mortgages.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.

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