
As of 2016, there were about 45 million adults aged 25 to 34 in the U.S, according to Freddie Mac’s March Insight report. However, as Freddie Mac notes, the “headship rate”, or percentage of adults heading a household, among young adults ages 25 to 36 has fallen by 3.6% from 2000 to 2016.
If Millennials had formed households at the same rate as adults their age did in 2000, 1.6 million additional households would have been formed by 2016. According to Freddie Mac, the decline stems from the disconnect between housing costs, which have risen by 29% in this interval, and real incomes, which have only risen 1%.
“We expect that as life progresses and today's young adults age, they will add around 20 million households to the U.S. economy, driving housing demand over the next decade,” says Len Kiefer, Freddie Mac deputy chief economist. “But…our research results indicate that 28% of the decline in young adult household formation is due to housing costs. If housing costs continue to rise, we could see about 600,000 fewer households over the next decade.”
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