Young Households Challenged As Unemployment Rate Trends Up

The unemployment rate for younger adults is climbing, and that trend is beginning to impact the housing industry. According to a recent report from the Joint Center for Housing Studies of Harvard University, the unemployment rate for those aged 16 to 24 has increased to 10.5% as of August. As a result, the report suggests young people are less likely to be set up for success in the future, often having less in savings and more difficulty entering the housing market.

Homeownership is already a major challenge for the youngest generation of adults. As of most recent 2023 data, just 5.2 million of the 30.5 million adults between the ages of 18 to 24 head their own households. Another 1.9 million were the partner of someone who owns their home. At the same time, 14.8 million lived with their parents and 2.6 million lived with another relative. For adults who were living on their own, more than half reported spending 30% or more of their income on housing.

The low rate of household formation among young adults reflects their lower levels of education, workforce participation, and independent financial resources. Even among those who were able to form a household, just a quarter had completed a bachelor’s degree. About one-third were currently enrolled in school (31 percent) and 8 percent were not in the labor force at all. As a result, nearly two-thirds of young adult households were low income (earning up to 80 percent of AMI), including two in five with very low incomes (earning up to 50 percent of AMI).

With such low incomes in what is often a transitional stage of life, young adults are especially likely to rent and move frequently. A substantial 82 percent of young adult households rented in 2023 and over half (52 percent) had lived in their homes for less than a year.