As the real estate market becomes more competitive amid higher values and increasing mortgage interest rates, the industry is left to consider where it will find first-time home buyers who drive so much of the housing sector in 2017.

According to the National Association of Realtors, first-timers represented 35 percent of all buyers in 2016.

While younger people would most likely fill the ranks of upcoming first-time home buyers, they have faced tough financial times in recent years.

“Young adults in the United States have experienced higher rates of unemployment and lower rates of labor force participation than the general population for at least two decades, and the Great Recession exacerbated this phenomenon,” said the Federal Reserve in a December report.

According to Ed Delgado President and CEO of The Five Star Institute, first-time home buyers and their millennial cohorts are sitting on an average of $37,000 in student debt. The amount of federal student debt is at a staggering $1.3 trillion.

Higher unemployment and staggering student debt continues to put cap on first time homebuyers in 2017.

“There’s no end in sight as it relates to student debt in this country,” he said.

With interest rates set to rise, even hardened mortgage professionals will have difficulty convincing millennials to buy homes.

The potential for rising interest rates also is having a sobering impact on potential first-time buyers.

According to the Real Deal website, the rise in interest rates since the election is presenting yet another obstacle to young people trying to enter the housing market.

“Many first-time home buyers have already seen their mortgage capacity eroded,” the report said, according to the Wall Street Journal. “If rates continue to rise, particularly if they rise rapidly over a short time period, they could add yet another obstacle to homeownership.”

A recent survey by Zillow has found that there is a widening gap along racial, socio-economic and generational likes that impacts the growth of the housing market and the ability of first-time home buyers.

And while the millennials may want to own homes, there is an increasing percentage in this age group who are living at home with their parents. There also are inconsistencies in housing affordability.

“Our research on housing has unlocked issues that are closely linked to broader social and economic problems in the U.S. – such as poor access to credit, weak economic growth and social mobility,” noted Zillow Chief Economist Dr. Svenja Gudell.

The Zillow survey also found that millennials who want to own homes have views about homeownership that are just as conservative as their grandparents.

The National Association of Realtors also found that millennial motherhood is on the rise, which could drive growth for real estate and finally drive them to purchase a home.

The recent reduction of FHA premium rates also has caught the attention of the real estate industry, according to David H. Stevens, president and CEO of the Mortgage Bankers Association.

“The reduction in the premium is a result of our industry’s and the FHA’s shared commitment to quality underwriting and consumers will benefit as a result,” he said. “Reducing the cost of FHA loans benefits borrowers, but other changes to reduce uncertainty for lenders would be required to truly invigorate the FHA program.”

With millennials of age and Generation Z on their heels, the sheer number of potential first-time home buyers today offers opportunity for the real estate market. The key challenge may be getting all segments of the industry on the same page.