Couple hugging on couch in living room | Oliver Rossi/Getty Images

For millennials striving to succeed at “adulting,” buying a home is a common goal. But millennials now hitting prime years for that first home purchase may have to stick to smaller, interior states to find a hospitable homebuying climate, according to a new Bankrate analysis.

We found California, New York, Texas, Colorado, Oregon and Massachusetts — states with large metro areas that are attracting young millennials — are among the 10 worst states for first-time homebuyers.

The best-performing states in our ranking are mostly Western and Midwestern states with varying degrees of urbanization. Iowa, Utah and Minnesota make up the top three.

Rank State Total score Housing affordability Job market for young adults Housing market tightness Credit availability Homeownership among millennials
Rank: 1 State: Iowa Total score: 40.32 Housing affordability score: 10.00 Job market for young adults score: 7.55 Housing market tightness score: 5.60 Credit availability score: 7.53 Homeownership among millennials score: 9.64
Rank: 2 State: Utah Total score: 40.16 Housing affordability score: 6.55 Job market for young adults score: 9.33 Housing market tightness score: 5.88 Credit availability score: 8.85 Homeownership among millennials score: 9.55
Rank: 3 State: Minnesota Total score: 39.60 Housing affordability score: 8.66 Job market for young adults score: 7.85 Housing market tightness score: 3.75 Credit availability score: 9.34 Homeownership among millennials score: 10.00
Rank: 4 State: Kansas Total score: 38.11 Housing affordability score: 8.18 Job market for young adults score: 7.67 Housing market tightness score: 7.02 Credit availability score: 8.33 Homeownership among millennials score: 6.91
Rank: 5 State: Missouri Total score: 38.10 Housing affordability score: 8.71 Job market for young adults score: 6.01 Housing market tightness score: 8.26 Credit availability score: 7.67 Homeownership among millennials score: 7.45
Rank: 6 State: North Dakota Total score: 37.66 Housing affordability score: 8.39 Job market for young adults score: 10.00 Housing market tightness score: 4.14 Credit availability score: 8.31 Homeownership among millennials score: 6.82
Rank: 7 State: South Dakota Total score: 37.50 Housing affordability score: 8.21 Job market for young adults score: 9.48 Housing market tightness score: 2.31 Credit availability score: 8.73 Homeownership among millennials score: 8.77
Rank: 8 State: Wyoming Total score: 36.91 Housing affordability score: 7.94 Job market for young adults score: 7.70 Housing market tightness score: 4.59 Credit availability score: 8.12 Homeownership among millennials score: 8.57
Rank: 9 State: Vermont Total score: 36.34 Housing affordability score: 8.51 Job market for young adults score: 7.82 Housing market tightness score: 8.55 Credit availability score: 6.00 Homeownership among millennials score: 5.46
Rank: 10 State: Nebraska Total score: 36.33 Housing affordability score: 9.68 Job market for young adults score: 8.71 Housing market tightness score: 1.65 Credit availability score: 8.95 Homeownership among millennials score: 7.33
Rank: 11 State: Idaho Total score: 36.32 Housing affordability score: 6.78 Job market for young adults score: 6.26 Housing market tightness score: 7.90 Credit availability score: 7.73 Homeownership among millennials score: 7.66
Rank: 12 State: Indiana Total score: 35.92 Housing affordability score: 9.23 Job market for young adults score: 4.29 Housing market tightness score: 6.65 Credit availability score: 7.56 Homeownership among millennials score: 8.19
Rank: 13 State: Montana Total score: 35.51 Housing affordability score: 5.86 Job market for young adults score: 6.66 Housing market tightness score: 9.11 Credit availability score: 8.19 Homeownership among millennials score: 5.69
Rank: 14 State: Oklahoma Total score: 35.18 Housing affordability score: 9.41 Job market for young adults score: 6.07 Housing market tightness score: 7.07 Credit availability score: 5.60 Homeownership among millennials score: 7.02
Rank: 15 State: Alaska Total score: 34.70 Housing affordability score: 7.22 Job market for young adults score: 3.59 Housing market tightness score: 8.12 Credit availability score: 10.00 Homeownership among millennials score: 5.77
Rank: 16 State: New Hampshire Total score: 34.68 Housing affordability score: 8.42 Job market for young adults score: 8.65 Housing market tightness score: 4.36 Credit availability score: 6.11 Homeownership among millennials score: 7.14
Rank: 17 State: Michigan Total score: 34.61 Housing affordability score: 9.65 Job market for young adults score: 3.13 Housing market tightness score: 7.24 Credit availability score: 6.19 Homeownership among millennials score: 8.40
Rank: 18 State: Wisconsin Total score: 34.51 Housing affordability score: 9.73 Job market for young adults score: 4.85 Housing market tightness score: 6.47 Credit availability score: 6.79 Homeownership among millennials score: 6.66
Rank: 19 State: Ohio Total score: 34.10 Housing affordability score: 9.95 Job market for young adults score: 5.31 Housing market tightness score: 5.25 Credit availability score: 7.32 Homeownership among millennials score: 6.27
Rank: 20 State: Pennsylvania Total score: 34.05 Housing affordability score: 9.28 Job market for young adults score: 4.02 Housing market tightness score: 6.04 Credit availability score: 7.48 Homeownership among millennials score: 7.23
Rank: 21 State: Illinois Total score: 33.78 Housing affordability score: 9.08 Job market for young adults score: 4.23 Housing market tightness score: 7.23 Credit availability score: 6.91 Homeownership among millennials score: 6.33
Rank: 22 State: Delaware Total score: 33.52 Housing affordability score: 7.06 Job market for young adults score: 4.48 Housing market tightness score: 6.92 Credit availability score: 7.33 Homeownership among millennials score: 7.73
Rank: 23 State: Arkansas Total score: 33.31 Housing affordability score: 8.64 Job market for young adults score: 5.46 Housing market tightness score: 8.81 Credit availability score: 3.89 Homeownership among millennials score: 6.51
Rank: 24 State: Arizona Total score: 33.25 Housing affordability score: 6.52 Job market for young adults score: 4.85 Housing market tightness score: 9.31 Credit availability score: 7.98 Homeownership among millennials score: 4.59
Rank: 25 State: Maryland Total score: 32.52 Housing affordability score: 7.96 Job market for young adults score: 5.12 Housing market tightness score: 5.08 Credit availability score: 7.98 Homeownership among millennials score: 6.37
Rank: 26 State: Virginia Total score: 32.04 Housing affordability score: 7.12 Job market for young adults score: 6.13 Housing market tightness score: 5.06 Credit availability score: 8.30 Homeownership among millennials score: 5.43
Rank: 27 State: Connecticut Total score: 31.88 Housing affordability score: 8.39 Job market for young adults score: 2.48 Housing market tightness score: 8.30 Credit availability score: 7.47 Homeownership among millennials score: 5.24
Rank: 28 State: Maine Total score: 31.80 Housing affordability score: 7.32 Job market for young adults score: 3.96 Housing market tightness score: 7.74 Credit availability score: 5.10 Homeownership among millennials score: 7.68
Rank: 29 State: Tennessee Total score: 30.85 Housing affordability score: 8.16 Job market for young adults score: 3.44 Housing market tightness score: 7.02 Credit availability score: 5.87 Homeownership among millennials score: 6.37
Rank: 30 State: North Carolina Total score: 29.42 Housing affordability score: 7.19 Job market for young adults score: 3.68 Housing market tightness score: 7.04 Credit availability score: 6.36 Homeownership among millennials score: 5.14
Rank: 31 State: New Jersey Total score: 29.11 Housing affordability score: 7.52 Job market for young adults score: 4.11 Housing market tightness score: 6.24 Credit availability score: 6.82 Homeownership among millennials score: 4.42
Rank: 32 State: Alabama Total score: 29.06 Housing affordability score: 8.57 Job market for young adults score: 0.00 Housing market tightness score: 9.84 Credit availability score: 3.43 Homeownership among millennials score: 7.22
Rank: 33 State: Georgia Total score: 28.81 Housing affordability score: 7.81 Job market for young adults score: 2.30 Housing market tightness score: 7.59 Credit availability score: 6.30 Homeownership among millennials score: 4.81
Rank: 34 State: Kentucky Total score: 28.52 Housing affordability score: 9.20 Job market for young adults score: 3.65 Housing market tightness score: 5.38 Credit availability score: 2.75 Homeownership among millennials score: 7.54
Rank: 35 State: New Mexico Total score: 28.28 Housing affordability score: 6.57 Job market for young adults score: 1.81 Housing market tightness score: 10.00 Credit availability score: 3.25 Homeownership among millennials score: 6.64
Rank: 36 State: Washington Total score: 27.66 Housing affordability score: 5.55 Job market for young adults score: 5.34 Housing market tightness score: 5.00 Credit availability score: 7.91 Homeownership among millennials score: 3.85
Rank: 37 State: Florida Total score: 27.42 Housing affordability score: 7.00 Job market for young adults score: 4.14 Housing market tightness score: 8.79 Credit availability score: 3.73 Homeownership among millennials score: 3.76
Rank: 38 State: Nevada Total score: 27.02 Housing affordability score: 6.11 Job market for young adults score: 2.67 Housing market tightness score: 7.21 Credit availability score: 7.28 Homeownership among millennials score: 3.76
Rank: 39 State: South Carolina Total score: 26.55 Housing affordability score: 7.34 Job market for young adults score: 2.73 Housing market tightness score: 6.47 Credit availability score: 3.28 Homeownership among millennials score: 6.73
Rank: 40 State: West Virginia Total score: 26.29 Housing affordability score: 9.86 Job market for young adults score: 1.35 Housing market tightness score: 6.67 Credit availability score: 0.00 Homeownership among millennials score: 8.42
Rank: 41 State: Massachusetts Total score: 26.06 Housing affordability score: 5.99 Job market for young adults score: 6.17 Housing market tightness score: 1.96 Credit availability score: 8.65 Homeownership among millennials score: 3.30
Rank: 42 State: Oregon Total score: 25.76 Housing affordability score: 4.56 Job market for young adults score: 5.28 Housing market tightness score: 4.83 Credit availability score: 8.55 Homeownership among millennials score: 2.55
Rank: 43 State: Colorado Total score: 25.71 Housing affordability score: 5.00 Job market for young adults score: 6.93 Housing market tightness score: 0.00 Credit availability score: 8.47 Homeownership among millennials score: 5.31
Rank: 44 State: Texas Total score: 25.33 Housing affordability score: 6.92 Job market for young adults score: 5.95 Housing market tightness score: 1.66 Credit availability score: 6.18 Homeownership among millennials score: 4.62
Rank: 45 State: Rhode Island Total score: 25.18 Housing affordability score: 7.00 Job market for young adults score: 1.84 Housing market tightness score: 5.22 Credit availability score: 7.94 Homeownership among millennials score: 3.17
Rank: 46 State: Mississippi Total score: 24.56 Housing affordability score: 5.89 Job market for young adults score: 2.18 Housing market tightness score: 8.19 Credit availability score: 1.13 Homeownership among millennials score: 7.17
Rank: 47 State: Louisiana Total score: 23.96 Housing affordability score: 8.11 Job market for young adults score: 3.28 Housing market tightness score: 3.18 Credit availability score: 2.69 Homeownership among millennials score: 6.70
Rank: 48 State: New York Total score: 23.12 Housing affordability score: 6.88 Job market for young adults score: 4.29 Housing market tightness score: 4.78 Credit availability score: 5.84 Homeownership among millennials score: 1.33
Rank: 49 State: Hawaii Total score: 20.16 Housing affordability score: 0.00 Job market for young adults score: 7.33 Housing market tightness score: 4.59 Credit availability score: 8.24 Homeownership among millennials score: 0.00
Rank: 50 State: California Total score: 13.67 Housing affordability score: 1.25 Job market for young adults score: 2.76 Housing market tightness score: 1.25 Credit availability score: 7.23 Homeownership among millennials score: 1.17

How we ranked the states

To measure how well different states accommodate first-time buyers, we focused on five major criteria:

  1. Housing affordability
  2. The job market for young adults
  3. Housing market tightness
  4. Credit availability
  5. Homeownership among the under-35 crowd

Source: Bankrate

RATE SEARCH: Ready to buy a home of your own? Get prequalified for a mortgage today.


Affordability tricky in popular states

Affordability is a huge issue for first-time buyers, especially in states with large and growing metro areas, says Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.

“When you have a state like California where the housing prices are really high and the rental housing is also really expensive, unless you have access to wealth from some source that’s not your job, it’s going to be really hard for you to amass enough of a down payment, and also the kind of credit that you need to get into the housing market,” Pendall says.

Would-be homebuyers in expensive markets are caught in a bind. The only way to get away from surging rents is to save up a down payment, but the rising rents keep them from saving.

To identify markets where affordability obstacles are highest, we used data on median home sale prices from CoreLogic and the National Association of Realtors, combined with U.S. Census five-year income estimates for households ages 25 to 44.

What we found was stunning: Principal and interest payments in the least affordable states consumed more than a third of household income, versus just 13 percent in the most affordable states.

  • Top three states for affordability: Iowa, Ohio, West Virginia
  • Bottom three: Hawaii, California, Oregon

Loans hard to come by in some states

Qualifying for a mortgage can be tough for millennials with relatively thin credit files compared to their older peers and no home equity to roll into down payments.

To find out how access to home financing varies across states, we turned to data from millions of mortgage applications available under the Home Mortgage Disclosure Act. Specifically, we zeroed in on rejected applications.

Again, the differences between the states could be stark. In Alaska, we found fewer than 5 percent of applications were turned down. In West Virginia, denials were three times as high.

One way to fight back: Start working on financing early in the home buying process and think local, says Tom Springer, a professor of real estate at Clemson University.

“Build a relationship with a physical, on-the-ground lender,” he says.

  • Top three states for credit availability: Alaska, Minnesota, Nebraska.
  • Bottom three: West Virginia, Mississippi, Louisiana.

RATE SEARCH: Find the best deal on a mortgage today.


Steady work a must

Successfully buying (and holding onto) a home is highly dependent on having steady work, so we incorporated 2016 government employment data into our ranking. We gave states with low unemployment rates for workers in the prime first-time homebuyer demographic of 25-34 the highest marks.

  • Top three states for 25-34 employment: North Dakota, South Dakota, Utah.
  • Bottom three: Alabama, West Virginia, New Mexico.

Tight markets aren’t your friend

Tight markets, where the pool of available homes is small and sellers typically get multiple offers, tend to work against young first-time buyers trying to break in.

Lawrence Yun, chief economist at the National Association of Realtors, cites Seattle, Denver and Portland, Oregon, as markets with an “acute inventory shortage.”

In many cases, “there’s a bidding war among the buyers, certainly putting millennials at a disadvantage,” he says.

We used two measures derived from Census data to assess how tight the housing market is in each state. The first is the percentage of vacant homes for sale or rent.

For the second, we took the spread between the growth rate in housing stock between 2010 and 2015 and combined it with the percentage change in the number of households between 2010 and 2015. The result indicates whether homebuilders in a state are keeping up with demand for new housing.

“The places that have the highest rents and the highest prices tend also to be the places where because of constraints of geography and regulations, builders can’t respond to rising prices by adding a lot more housing,” says Pendall.

  • Three states with least tight housing markets: Alaska, Vermont, New Mexico.
  • Three tightest: Colorado, California, Texas.

Millennials frozen out of popular markets

Ultimately the best measure of which states provide a welcoming environment for first-time buyers may be looking at how many younger households have actually managed to do it.

Using Census data, we calculated the percentage of households under 35 living in owner-occupied housing. Again, there was a large range, with under a quarter of young households in Hawaii, California and New York living in homes they own, compared to more than 40 percent that do in Minnesota, Iowa and six other states.

“It is the youngest adults who are taking the biggest hit downward in ownership rate,” Yun says, in part because of the fallout from the Great Recession.

  • Top three states for millennial homeowners: Minnesota, Iowa, Utah.
  • Bottom three: Hawaii, California, New York.

COOL TOOL: Use Bankrate’s mortgage calculator to find out how much house you can afford.


Better times ahead?

The news isn’t all bad for first-time homebuyers. Mortgage rates are still very low by historical standards, allowing millennials to afford pricier homes than previous generations of first-time buyers.

Plus, first-time buyers have access to Federal Housing Administration (FHA) loans that allow them to make a down payment of as little as 3.5 percent of the purchase price.

Yun says young professionals who aspire to homeownership should seriously consider looking for work in smaller “second-tier” markets that offer amenities like walkability and restaurants at a much lower cost.

If that’s not an option, would-be first-time buyers always have the option of staying on the sidelines — for now.

“Hopefully with an improving economy, their wage rates begin to rise, and with homebuilders able to build more homes, hopefully that will contain some of the price growth,” Yun says, “giving a better chance for millennials in the future.”