While there is a strong desire among Americans to own a home, an analysis by the National Association of Realtors determined that student loan debt presented a significant hurdle to homeownership in 2016. However, the organization also suggests that many renters are also hindered by erroneous expectations on how much money they need for a down payment.

The National Association of Realtors recently released its Aspiring Home Buyer Profile for 2016. This report looks at data from the organization's quarterly Housing Opportunities and Market Experience surveys, which garnered a total of 11,035 responses.

Sixty-three percent of respondents in the year's surveys were homeowners, while 26 percent were renters and 11 percent lived with someone else. Non-owners tended to be younger and have lower incomes; 59 percent were 34 years old or younger, and 64 percent earned less than $50,000 a year.

Throughout the year, about nine out of 10 homeowners said they considered owning a home to be part of their own "American Dream." Non-owners had similar aspirations, with about eight out of 10 holding the same view.

However, people who didn't own a home grew gradually more pessimistic about their prospects throughout the year. Sixty-three percent considered it a good time to buy a home in the first quarter of 2016, but this share fell to 55 percent in the fourth quarter. The drop was less pronounced among homeowners; 82 percent felt it was a good time to buy in the first quarter, and this share was down to 78 percent at the end of the year.

"Nearly all non-homeowners [87 percent] said they want to own a home in the future, but it's evident that higher rents and home prices—up 41 percent in the past five years—along with limited entry-level supply and repaying student debt have combined to make buying a challenging goal," said Lawrence Yun, chief economist at the National Association of Realtors. "It's also little surprise that non-owners in the West—where price appreciation has been the strongest—were the least optimistic about buying."

Throughout the year, between 86 and 87 percent of non-owners said they hope to buy a home in the future. On average, 35 percent said they would be most likely to purchase a home in response to a life event, such as getting married, starting a family, or retiring. Twenty-six percent said an improvement in their financial situation would be the main reason they would buy, while 15 percent said it would be a desire to settle down in one location and 12 percent said they would buy if their employment situation became more stable.

Non-owners cited affordability as the main reason why they had not tried to purchase a home. An average of 54 percent gave this response, compared to an average of 22 percent who said they needed the flexibility offered by renting and 10 percent who said they did not want the responsibility of owning a home.

In the HOME survey for the second quarter of 2016, 39 percent of non-owners said they had student debt. Of these respondents, 59 percent said they would not be comfortable with taking on mortgage debt. A separate study by the National Association of Realtors in 2016 found that almost three-quarters of non-homeowners who were employed but had student loans considered that the debt was interfering with their ability to purchase a home, with a little more than half expecting that they wouldn't be able to buy for at least five years.

"In addition to having to postpone important milestones such as getting married and starting a family, many young adults are financially falling behind previous generations in part because of having to prioritize repaying their sizeable student loans over buying a home and saving for retirement," said Yun.

While the report acknowledged concerns with affordability and debt load, it also pointed out that non-owners often overestimate the amount of money they will need for a down payment on a home. Real estate professionals often recommend paying at least 20 percent of the asking price up front to avoid private mortgage insurance and secure the best interest rate. However, the median down payment for first-time buyers has been 6 percent for the past three years, while repeat buyers have made a median down payment of 14 percent for three of the past four years.

Eighty-seven percent of non-owners in the third quarter HOME survey thought they needed to put down more than 10 percent on a home purchase. Thirty-nine percent thought that more than 20 percent was needed, 26 percent expected to pay 15 to 20 percent, and 22 percent expected to pay 10 to 14 percent.

The National Association of Realtors determined that existing home sales in the United States showed year-over-year growth of 3.8 percent in 2016, reaching their highest level in a decade. The organization expects that existing home sales growth will slow to 1.7 percent this year.