Reversing the post-pandemic rebound, the headship rates among young adults (the share of the population heading their own households) declined in 2024, according to NAHB’s analysis of the American Community Survey (ACS) data. Even so, the current rate of 43.7% marks a significant improvement from 2017, when only 40.2% of adults ages 25-34 headed their own households. At the same time, compared to the standards of the 1990s and early 2000s, when nearly 46% of young adults in this age group were household heads, the current headship rates remain below that benchmark.
Declining headship rates mean that adults form fewer households and demand fewer housing units. The recent wide fluctuations in headship rates demonstrate their susceptibility to cyclical factors. This is particularly true for younger adults, who recorded some of the largest fluctuations in headship rates. Following the housing market collapse of 2008 and the subsequent slow recovery, the headship rate for adults ages 25-34 declined persistently for over a decade. By 2017, the rate hovered just above 40%, as a growing share of young adults lived with parents, in-laws, other relatives, or shared housing with roommates. Reflecting improving housing affordability, headship rates for young adults stabilized in 2018 before the pandemic rocked the housing market, but the gains were modest at that time.
The COVID-19 pandemic released some pent-up housing demand, especially among young adults. A heightened preference for space and independence, combined with excess savings accumulated during lockdowns and low mortgage rates, pushed the headship rate for 25- to 34-year-olds to 44.2% in 2023—the highest level since the 2008 housing crash. However, persistent housing shortages and builders’ limited ability to expand production prevented a full return to the higher headship rates.
In addition to cyclical economic constraints, including housing shortages, affordability pressures, labor market conditions, and credit tightening, long-term demographic and social trends can influence headship rates. While cyclical factors cause temporary fluctuations, fundamental structural changes, such as delaying marriage and childbearing, rising student debt, and greater acceptance of shared living arrangements, may have lasting effects, permanently lowering equilibrium headship rates. NAHB’s analysis of historical Decennial Censuses and ACS data shows that headship rates have decreased across all adult age groups over the past several decades. Adults ages 25 to 34 experienced some of the largest declines since the 1990s and early 2000s. If these long-term trends represent permanent shifts in life-cycle timing and living preferences, then the headship rates from the 1990s and early 2000s may no longer serve as accurate long-term benchmarks for forecasting or policy. In fact, the long-term average, commonly used as a proxy for normal or equilibrium rates, is now several percentage points below the headship rates of the early 2000s for all age groups.
Geospatial analysis of the 2024 ACS data highlights considerable variation in headship rates across states, demonstrating how differing demographics, social factors, and economic conditions affect young adults’ ability to establish their own households. States with higher rental and homeownership burdens typically show lower headship rates and higher proportions of young adults living with parents or sharing housing with roommates. For example, Hawaii and California, two states with the highest proportions of cost-burdened homeowners, have the lowest headship rates among young adults, at 32% and 36%, respectively. Conversely, in North Dakota, South Dakota, Nebraska, Iowa, Wisconsin, and Wyoming, over half of young adults take the lead of their own households—all states with some of the lowest housing cost burdens. Notably, North Dakota, Nebraska, Wyoming, and Idaho also have the highest percentage of married young adults co-leading households, ranging from 24% to 26%. In contrast, in Hawaii and California, the percentage barely reaches 13%.
This article was originally published by a eyeonhousing.org . Read the Original article here. .
