Housing industry professionals view the continuing decline in the nation’s home ownership rate (which hit a new low in the second quarter) as a sign of housing market distress – if not a cause of it. But some Federal Reserve economists think the trend reflects good sense on the part of ‘millenials’ who have demonstrated a marked preference for renting homes over owning them.

Challenging the conventional wisdom that young consumers should stretch as much as necessary to enter the housing market as soon as they can, two St. Louis Fed researchers suggest that millenials would be well-advised to delay the home buying step, building wealth and achieving financial stability in other ways before buying their first home. The researchers Bill Emmons, and Bryan Noeth, senior economic adviser and lead policy analyst, respectively at the St. Louis Fed’s Center for Household Financial Stability ―aren’t suggesting that owning a home is a bad idea; only that stretching too much and too soon to make the purchase may be a mistake, if it leaves a family without the ability to save and diversify its investments.

Millenials would be better advised, they suggest, to “delay the purchase of a home with its attendant debt burden until it is possible to buy a house that does not make the family’s balance sheet dangerously undiversified and highly leveraged.”

The major point of their essay is that wealth-building varies, or should vary, by age, education level and race. And millenials, in their view, should mimic the strategies and portfolio mix of older households, with less debt and less emphasis on real estate in their portfolio mix.

Surveys indicate that millenials view home ownership as a desirable goal and Emmons and Noeth don’t disagree. They just think this generation should wait a bit longer and save a bit more than previous generations did before taking that step.