The U.S. has around 2.4 million less households than it “should” have, according to a new analysis from the National Association of Home Builders.
The NAHB says the reduced household formation is mainly due to larger percentage of millennials staying at home instead of flying the nest, and cites rising home costs and personal debt as two of the main factors behind this trend.
The NAHB said in its analysis that the number of young adults who’ve chosen to remain with mom and dad has risen from 15.3 percent to 26.3 percent from 2000 to 2016.
“This story is quite different in different states,” said Natalia Siniavskaia, assistant vice president for housing policy research at the NAHB. “There are states where headship rates for this age group are north of 50 percent, such as North Dakota and Iowa. And there are states like California and Florida where young adults are much more likely to live with parents.”
Those states with the most expensive homes, not surprisingly perhaps, tend to have the lowest number of households formed by 25 to 34-year olds, the NAHB said. The top five states with the least amount of millennial households are Hawaii, New Jersey, California, Florida and Alaska, the research found.
Those states with more affordable housing tend to have higher rates of young adult house formation however. In this regard, the states of North Dakota, Iowa, South Dakota, Nebraska and Kansas lead the way.
A recent Bankrate survey found that the majority of Americans believe 28 is the ideal age to buy a first home, and the NAHB’s Siniavskaia said he was confident that most young Americans should be able to achieve homeownership by then, despite recent trends.
“As the economic situation continues to improve, it should give more stability and confidence to younger adults to buy their homes or leave parental homes,” Siniavskaia said.
Siniavskaia could still be right, as recent data from the Census Bureau shows that new housing trends could be taking shape. The homeownership rate for younger adults rose in the last year to 35.3 percent, up from 34.5 percent.