Young adults moved home and then back out during the pandemic, disrupting millions of households
Changes in the makeup of the country's households typically take place gradually, following predictable demographic shifts. But at the start of the pandemic, the number and composition of households shifted dramatically and quickly, driven by young people leaving behind roommates or solo living and moving in with family.
More than 2.5 million households dissolved and later reappeared in 2020 — an unprecedented contraction and expansion in the country's total number of households, according to an analysis of census data that Apartment List published in July.
The country lost more than 2.5 million households in early 2020, when the total fell to 127.6 million, according to Apartment List. Two percent of households disappeared, negating almost three years of growth.
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But household formation bounced back quickly. By the end of 2020, the country regained the 2.5 million households that had disappeared. It gained an additional two million in 2021. As of June, the country had 131.8 million households, down slightly from an all-time high reached last fall.
"The fact that it took a pandemic to create the household shifts that we saw signals to me that this is a very rare event," said Rob Warnock, senior research associate at Apartment List and the report's author. "It was a really salient exercise in supply and demand economics that we don't usually get to see in the housing market."
Trends in household formation affect demand for homes and the cost of housing. The continued trends of more people living alone and more people entering their peak household formation years have helped drive increases in housing prices, according to Apartment List.
Decades of demographic shifts
Americans have been marrying later in life and having fewer children. The share of the country's households made up of two married parents, their children, and no one else was:
41% in 1970
20% in 2019
In 2019, households were more likely to be a single person living alone or a couple living together without children. These households made up 28% and 26% of all households, respectively.
Households with two or more families — such as in roommate situations — or unmarried couples have become more common through the years, but they still make up only a fraction of total households.
Out of all households in 2019, roughly:
4% consisted of people from two or more families
4% were unmarried couples
20% were nuclear families of married parents with their children
22% were married couples
29% were single people
21% were all other households where members belong to one family
During recessions, households tend to grow in size as more people double up to save money. Growth in the number of new households slows. That's what happened early in the pandemic. But none of the country's other recessions affected household growth "as dramatically" as the one caused by the pandemic, Warnock said.
Household losses two years ago, during the first six months of the pandemic, were more than double the losses from late 2009 to early 2010 during the Great Recession, according to his research.
Single-person households drove shifts. Three in five of the 2.5 million households that disappeared early in the pandemic were made up of a single person. More than four in five of the 4.5 million households that formed afterward were single-person households.
Early in the pandemic, young adults moved in with parents, forming more nuclear households — a household type that has been on the decline for at least 50 years. During this period, this was the only household type that grew as the country's overall number of households fell.
This trend reversed in 2021. But this year, the number of nuclear households has risen as younger generations form families.
A majority of household formation over the last couple of years took place in the rental market, since renters were more free to leave households in 2020 and form new ones in 2021, according to Apartment List.
At the beginning of the pandemic, people started spending more time at home, which strained relationships and is another reason for household changes. In an interview this spring, Philadelphia attorney Lopez T. Thompson said he had seen an increase in divorce cases at his practice over the last two years. He said he had never seen so many divorce clients at one time.
In 2020, more than half a million roommate households — in which unrelated people live together — disbanded. The number of these households has remained below pre-pandemic levels, according to Apartment List.
Household growth affects home prices
The quick and dramatic change in the number of households "was a big reason why we saw some places get dramatically cheaper very quickly while other places got expensive quickly," Warnock said.
Four million households appeared in a short period of time as the number of households bounced back from early pandemic lows. They represented increased demand for homes.
High prices and low supply make buying a home harder, especially for Black households
The large millennial generation is in its prime years for household formation, which is helping to drive demand for homes. Strong demand and an inadequate supply have forced up the cost to rent or own a home.
When apartment demand decreased in 2020, rents fell. When demand increased in 2021, rents rose. This year, both household growth and rent growth have slowed. Increased demand among home buyers and low supply of homes for sale drove up for-sale prices.