More than 2.5 million households dissolved and reappeared during the pandemic
Changes in the composition of the country’s households generally occur gradually, following predictable demographic changes. But at the start of the pandemic, the number and composition of households changed dramatically and rapidly, driven by young people leaving behind roommates or living alone and moving in with their families.
More than 2.5 million households dissolved and reappeared later in 2020 – an unprecedented contraction and expansion in the total number of households in the country, according to an analysis of census data released by Apartment List last week.
The country lost more than 2.5 million homes at the start of 2020, when the total fell to 127.6 million, according to Apartment List. Two percent of households disappeared, reversing nearly three years of growth.
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But household formation rebounded quickly. At the end of 2020, the country found the 2.5 million homes that had disappeared. It earned another two million in 2021. In June, the country had 131.8 million households, down slightly from the all-time high reached last fall.
“The fact that it took a pandemic to create the household changes we’ve seen signals to me that this is a very rare occurrence,” said Rob Warnock, senior research associate at Apartment List and author of the report. “It was a really salient exercise in the economics of supply and demand that we don’t typically see in the housing market.”
Household formation trends affect housing demand and the cost of housing. According to Apartment List, continued trends of more people living alone and more people entering their peak household-forming years have helped drive up house prices.
Americans are marrying later in life and having fewer children. The share of households in the country consisting of two married parents, their children and no one else was:
In 2019, households were more likely to be a single person living alone or a couple living together without children. These households represented 28% and 26% of all households, respectively.
Households with two or more families – as in shared tenancy situations – or unmarried couples have become more common over the years, but they still represent only a fraction of total households.
Of all households in 2019, approximately:
4% were made up of people from two or more families
4% were unmarried couples
20% were nuclear families of married parents with their children
21% were all other households whose members belong to a single family
During recessions, household sizes tend to get bigger as more people double up to save money. Growth in the number of new households is slowing. This is what happened at the start of the pandemic. But none of the country’s other recessions have affected household growth “as dramatically” as that caused by the pandemic, Warnock said.
According to his research, 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.
Single-person households drove shifts. Three in five of the 2.5 million households that disappeared at the start of the pandemic were made up of just one person. More than four out of five of the 4.5 million households that subsequently formed were one-person households.
At the start of the pandemic, young adults moved in with their parents, forming more nuclear households – a type of household that has been in decline for at least 50 years. During this period, it was the only type of household that increased while the total number of households in the country decreased.
This trend reversed in 2021. But this year, the number of nuclear households has increased as younger generations form families.
The majority of household formation over the past two years has taken place in the rental market, as renters were freer to leave households in 2020 and form new ones in 2021, according to Apartment List.
At the start 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’s seen an increase in divorce cases at his firm over the past two years. He said he had never seen so many divorced clients at once.
As of 2020, more than half a million roommate households — in which unrelated people live together — have dissolved. The number of such households remained below pre-pandemic levels, according to Apartment List.
The rapid and dramatic change in household numbers “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 emerged in a short time as the number of households rebounded from lows at the start of the pandemic. They represented an increased demand for housing.
» READ MORE: High prices and low supply make it harder to buy a home, especially for black households
The large millennial generation is in its early years of household formation, helping to drive demand for housing. High demand and insufficient supply have driven up the cost of renting or owning a home.
When demand for apartments fell in 2020, rents fell. When demand increased in 2021, rents increased. This year, household growth and rental growth have slowed. Increased demand from homebuyers and a low supply of homes for sale pushed sales prices up.