How the COVID-19 Pandemic Shifted Household Formation Among Young Americans
The COVID-19 pandemic disrupted decades-old trends in household formation as Millennials reached peak homebuying age and ultra-low mortgage rates led to a nationwide Great Migration. Headship rates of young adults aged 25 to 34 rose by 2 percentage points to 43.1% during the pandemic, the highest level since 2010, the National Association of Home Builders' Eye on Housing reports.
Between 2019 and 2021, the share of young adults living with their parents fell 1.5 percentage points from 21.2% to 19.7%, while the number of young adults sharing housing with roommates decreased 1.4 percentage points from 7.2% to 5.8% amid a two-year housing boom that boosted desire for more spacious and independent living options.
The higher the headship rate, the more households are formed, and the more housing units are needed to be built. For decades, U.S. headship rates of young adults have been declining, suggesting the U.S. housing market has been missing millions of new young adult households. Close to 46% of adults ages 25 to 34 were household heads in 1990 and 2000. Since that time, headship rates for this age group have been declining relentlessly and hit a bottom reading of 40.2% in 2017.