Millennial-led Households are Missing

Moving is not easy, especially for today’s young adults trying to get into a place of their own.

In fact, just 40% of those ages 25 to 34 led their own household in 2016, and that number has been dropping steadily since 2000 (46%). According to NAHB analysis by economist Natalia Siniavskaia, that missing 6% equates to roughly 2.4 million would-be households.

While all age groups recorded continuous declines of headship rates between 2000 and 2016, none saw a faster drop than the 25-to-34 year olds — once the primary driver behind the big housing boom of the post-World War II era.

Affordability is the big issue, with the high costs of living, escalating rental rates and rising home prices — factors that impact people of all ages, but might seem especially daunting to younger generations with typically fewer resources and lower salaries.

As a result, young adult house sharing has risen significantly: The portion of young adults who choose to live with their parents or other relatives rose from 15.3% in 2000 to 26.3% in 2016. Additionally, the percent of those who live with roommates (non-relatives) jumped from 5.1% in 2000 to 7.5% in 2016.

A clear trend emerges when comparing household formations — or lack thereof — across the country: States with the more expensive housing markets have the lowest headship rates among 25-to-34 year olds. California, New Jersey, Florida, New York and Hawaii are consistently among the least affordable places to live and have the lowest headship rates, some of which are well below 37%.

On the other end of the affordability scale, states such as North and South Dakota, Iowa and Nebraska register the highest headship rates, ranging between 48%-49%.

Source: NAHB Eye on Housing report

 

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