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As the U.S. continues to recover from its economic recession, growth looks to jump another hurdle in 2015 as more and more young adults look to move from the homes of relatives, according to a report.
In the final quarter of 2014, 1.3 million households were formed in the nation, with 1.7 million being added throughout the year. From 2007 to 2013, household formation — which happens when children move from their parents’ homes, a couple separates or roommates obtain their own places — the U.S. averaged 570,000 new households per year.
USA Today’s report on the matter expounds on the trend:
A new household is formed when children move from their parents’ homes, couples separate or roommates venture out on their own. Those who move into newly built houses provide the biggest spark for the economy: Construction of a single-family house adds an average 3.5 new jobs for a year, says Mark Zandi, chief economist of Moody’s Analytics. Building an apartment adds one job for a year.
Yet even Americans who rent apartments or buy existing houses fill up the units with furniture and appliances, and force builders to put up new homes to meet the additional demand, generating a whirl of economic activity.
Household formation has been feeble — with nearly a quarter of U.S. homes shared — for various reasons.
Some of the millions of Americans who lost homes during the foreclosure crisis are still rebuilding their credit while living with friends or relatives. And despite accelerating job growth, wage gains are barely keeping pace with inflation, and many new jobs are part-time or in low-paying sectors such as retail, says Lawrence Yun, chief economist of the National Association of Realtors.
Meanwhile, a staggering 44 percent of adults living with parents or other relatives said they planned to rent or purchase homes this year, according to a UBS survey from November.
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