Fannie Mae CEO she reveals her number 1 tip for first-time buyers: 'The American dream is still alive - it might just take longer!'

As mortgage rates soar and house prices remain high, many may be left questioning whether the American dream is officially dead. 

But Fannie Mae CEO Priscilla Almodovar insists it is still attainable for most young people - though they'll have to be patient.

'The American dream is still very much alive, it might just take a bit longer,' she told Fortune's Leadership Next podcast. 

Almodovar, who grew up in rented homes, added: 'Did my parents dream of having a home? Was that home what changed the trajectory of our life? Absolutely.

'And today, owning a home is still the number one way where families build generational wealth.'

Prospective buyers are currently facing one of the least affordable property markets in recent memory. The median house price in the US is currently $412, 219, up 6.5 percent from last year, according to property portal Redfin. 

Fannie Mae CEO Priscilla Almodovar insists the American Dream is still attainable for most young people - though they'll have to be patient

Prospective buyers are currently facing one of the least affordable property markets in recent memory. The average rate on a 30-year fixed mortgage is currently 6.87 percent

Meanwhile data from Government-backed lender Freddie Mac shows the average rate on a 30-year fixed mortgage is 6.87 percent.

This is more than double where they were three years ago when they were hovering at 3.17 percent.

It means a buyer purchasing a $400,000 property today faces monthly payments of $2,495. This analysis assumes a 5 percent downpayment.

However, had they bought in March 2021, this figure would be just $1,637 - a difference of $800 per month. 

Despite these prohibitive costs, Almodovar insists: 'Millennials still want to be homeowners and raise a family. Millennials are still driving that demand.'

She also issued her number one advice for renters looking to become homeowners. 

She recommended that renters ask their landlord to report positive rent payments to credit bureaus such as Equifax, Experian and Transunion. 

'Fix your credit. Having thin credit or no credit is an obstacle,' she said.

'If you're a renter, see if your landlord will report your positive rent. Get that all fixed. I think it's job number one.'

She added that prospective buyers should educate themselves about homeownership and 'really understand the cost' involved. 

The average US credit score was 715 in 2023, according to a January report by Experian. Millennials have an average score of 690 while Gen Z have 680.

Rocket Mortgage says the qualifying credit score for most conventional loans is 620.

Almodovar's comments come after President Biden unveiled plans to boost housing affordability during his State of the Union address. 

Almodovar's comments come after President Biden unveiled plans to boost housing affordability during his State of the Union address

At the center of the housing initiatives were two tax credits. The first would help to mitigate the current cost of a mortgage, the other would aim to increase housing supply

Biden also discussed reducing the cost of refinancing a mortgage by eliminating lender's title insurance on some refinances

The plan - which would require congressional action before it goes into affect - could see millions of homebuyers handed $10,000 tax credits spread over two years.

Among those to benefit will be first-time buyers. The money will reduce their mortgage by 1.5 percentage points for two years, the White House said.

Biden is also calling on Congress to provide a one-year tax credit of up to $10,000 to families who sell their so-called 'starter home.'

This is defined as a property that is valued below their area's median home price in the county.

The White House similarly would not elaborate on what was meant by 'up to $10,000'.