Why are household formations so low? Because 1.2 million more adults live with their parents than just 8 years ago!
Nearly 4% of US households had an oldest child aged 25–34 living at home in 2012. Compare this to 2006, when approximately 3% of households fit this category.
While the jump from 3% to 4% may seem small, the net result of this shift is 1.2 million additional households with an adult child in this age group. And it isn’t just confined to those under 35. The share of US households with an oldest child aged 35 or older living at home is approximately 3% and has been rising as well.
This major demographic shift is creating a lot of pent-up demand that someday will be unleashed. Most of these young adults will rent first, except for those who have taken this time living with mom and dad to save up for a down payment. As we showed previously, today’s young adults have achieved homeownership at a lower rate than their parents at the same age, and we believe that they will continue to do so for some time.