Chosen Solution
I bought this phone used and didn’t notice initially that the home button doesn’t make a clicking sound like its supposed to. I’ve tried cleaning with alcohol but it didn’t improve much. Functionality is good if I push hard with my thumb nail, but that’s awkward. Could something just need tightening?
In my experience, simply loosening the screws a quarter turn will suffice. It all depends on the screen that’s being used tough, since you bought it used you’ll have to open up and see if the screen is original or not. I have experience with really crappy screens that either sit too tight like in your case or too loose to be pushed beneath the screen. Ben’s answer is a good solution to it is as well in the case of a crappy screen, but try loosening the screws a bit before you go bending the plates!
You need to either bend the metal plate that holds in with two screws behind the home button either inwards or outwards from the center. That way you can adjust the distance between the metal plate circle and the home button.