The recession reduced the rate at which Americans set up new homes or apartments by at least half. Although the number of new households has begun to recover over the past year, its growth rate continues to lag behind its historic pace, according to Census Bureau statistics.
More than one in five adults between ages 25 and 34 live with their parents or in other “multi-generational” living arrangements, the highest level since the 1950s, according to the Pew Research Center.
Analysts estimate that there are more than 2 million fewer occupied homes than there would have been had Americans continued moving into new homes and apartments at the rate they did before the recession. Not only are young people returning to the nest in numbers not seen in generations, but also the weak job market and increased border enforcement have caused a marked decline in immigration, hobbling another major source of new households.
The slowdown has broad implications for the economy. It has trimmed demand for housing, even as the economy struggles to absorb the oversupply of new homes that came with the housing bubble and the millions of foreclosures that continue to weigh on the market.
An estimated two-thirds of the excess vacant housing in the country is the result not of the glut of housing construction that helped cause the downturn but by the drop in demand caused by the recession, according to the National Association of Home Builders. Both are culprits in the continued weakness in housing prices.
As the slump in the number of people finding their own places to live has chilled demand for new housing, it also has reduced sales of furnishings and appliances that typically accompany home sales, creating an additional drag on the recovery.
Housing has led the United States out of most of the recessions experienced since 1960, but if that vital industry is to significantly strengthen the current recovery, Americans are going to have to find their own homes at a more vigorous pace.
The question of what will provide that boost quickly leads to a conundrum: As the recovery gains additional momentum, households will resume their previous rate of growth, economists say. That would lower unemployment and promote stronger immigration.
But researchers also acknowledge that the recovery will not reach full steam until new homes are created at a stronger pace.
“It is hard to see what’s going to turn this around without better job and income growth,” said Daniel McCue, research manager at Harvard University’s Joint Center for Housing Studies. “But the way the job market is going, I don’t see any [immediate] change.”