Household Formation Is 'Disturbingly Slow,' Analyst Says

September 24, 2014

Household formation slowed significantly last year, a signal that more people are continuing to move in with family or double up as roommates, which could slow the housing market recovery, according to the latest annual Census Bureau survey.

The United States added 476,000 households for the year ending in March. That compares to 1.3 million households added, on average, in each of the two years prior.

The survey shows “disturbingly slow growth,” Thomas Lawler, an independent housing economist in Leesburg, Va., told The Wall Street Journal.

Additional surveys show that the U.S. population increased by 2.3 million last year. If household formation continues at the same rate of the past few years, the country should have added 1.2 million households last year, The Wall Street Journal reports. Instead, studies are showing that only 400,000-plus households were added last year, and the majority of those were renter households.

Recent surveys have shown that the share of young adults living with their parents is falling, but they aren’t necessarily forming their own households once they move out. They may be moving in with other relatives or friends. The home ownership rate of 18- to 34-year olds continued to drop last year, The Wall Street Journal reports.

Source: “Rate of Americans Starting Own Households ‘Disturbingly Slow,’” The Wall Street Journal (Sept. 22, 2014)