As housing has become less affordable, young adults are feeling the pinch the most. The homeownership rate among adults ages 25 to 34 is lower than for previous generations at the same age, and more attention has been directed toward alternate ways young adults might purchase a home. But even this dire situation may be worse than it seems.
According to the American Community Survey, the homeownership rate for household heads ages 25 to 34 declined sharply following financial crisis—from 47 percent in 2005 to 37 percent in 2015—before partially recovering to 40 percent by 2024. But this conventional measure overstates the extent of the recovery.
The traditional homeownership rate is calculated as the share of households that are owner occupied. This measure excludes young adults who have not formed independent households, such as those living with parents, other relatives, or roommates.
Because independent household formation declined substantially between 2005 and 2017 and has only modestly recovered since, the exclusion of these young adults masks the “true” homeownership rate. If we do consider these individuals, the decline in homeownership over the past two decades is roughly double what the traditional measure suggests.
Young adults are less likely to form independent households
In 2005, just 12 percent of young adults lived with their parents. A decade later, 21 percent did. Since then, the share has stayed relatively stable, with 20 percent of young adults living with their parents in 2024. Similarly, the share of young adults living with others, such as roommates, significant others, or family members other than parents, increased from 14 percent in 2005 to 19 percent by 2015, dropping slightly to 18 percent in 2024. At the same time, the share of young adults who are homeowners (as household heads or spouses) fell sharply from 40 percent in 2005 to 26 percent in 2015, recovering only partially to 29 percent in 2024.
Notably, the 2019–22 period, which was characterized by historically low interest rates, saw slight increases in household formation and homeownership among young adults. But this trend reversed between 2022 and 2024 as interest rates rose, underscoring the sensitivity of young adult housing outcomes to worsening affordability.
Marital status plays a critical role in living arrangements
The marriage rate among young adults has steadily declined over the past two decades, with the share of married individuals falling from 53 percent in 2005 to 38 percent in 2024. Because married young adults are far more likely to be homeowners than those who have never married or who were previously married, this decline could partially explain the falling homeownership rate.
Looking at the data conditional on marital status, the share of homeowners shows a stronger recovery than aggregate figures suggest. Among married young adults, the share of homeowners fell from 61 percent in 2005 to 49 percent in 2015 but rebounded to 56 percent by 2024. Trends for previously married and never-married young adults follow a similar pattern, though with more modest recoveries. These data indicate that delays in marriage do partially explain the slower recovery in homeownership since 2015.
But all marital groups were less likely to form an independent household in 2024 than in 2005, with those who have never married being the least likely. Married young adults are consistently the most likely to form independent households, which also suggests that delayed marriage has contributed to the past decade’s slow rebound in household formation rates.
What do these trends mean for the homeownership gap?
Standard homeownership metrics obscure two important dynamics. First, owner-occupied households tend to be larger—that is, married couples are more likely than single people to own a home. This biases household-based homeownership rates downward relative to an individual-based measure, as the couple and the single person each count as one household. Second, and more importantly, the exclusion of individuals who haven’t formed independent households pushes homeownerships rates upward, as these people are not included in the denominator.
At the individual level, the share of young adults who are homeowners declined from 40 percent in 2005 to 29 percent in 2024: an 11 percentage-point drop. This “real” homeownership rate is substantially lower than the traditional homeownership rate measured at the household level, and it indicates a larger deterioration in homeownership over time.
Roughly half the decline in the real homeownership rate is attributable to reduced household formation. If the share of young adults forming independent households had remained at 75 percent (instead of declining to 63 percent), the 2024 homeownership rate would have been 34 percent rather than 29 percent.
Policymakers need to address broader constraints on household formation
These findings suggest that improving young adult homeownership requires going beyond mortgage access to address the broader constraints on household formation. Affordability remains a central driver. The reversal in both household formation and homeownership between 2022 and 2024 highlights how sensitive young adults are to rising costs and interest rates. Expanding the supply of entry-level housing, lowering barriers to new construction, and supporting pathways into independent living can help make housing costs more affordable.
Demographic shifts, particularly the decline and delay in marriage, also indicate that housing policy and mortgage systems may need to better reflect the realities of single and nontraditional households. This could look like creating smaller, less expensive units or expanding cobuying programs for friends or extended families.
Several important questions remain. More research is needed to disentangle the causal relationship between marriage, economic stability, and homeownership and to understand the key drivers of delayed household formation. Affordability pressures can partially explain these trends, but other factors, such as labor market conditions, rising child care costs, and shifting housing preferences, play a role.
It is critical to examine how these trends vary across demographic and geographic groups and whether delayed entry into homeownership leads to permanently lower lifetime ownership rates.
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