Household Formation Sluggish Despite Growing Population

In May of this year, 25 to 34 year old first-time buyers accounted for 31 percent of all home sales transactions of REALTORS®, roughly the same level as was set in 2012.

Experts say that first-time buyers have been delayed in forming their own households and becoming heads of household, and attribute this trend to economic and sociocultural forces. The National Association of Realtors' research economist Scholastica Gay Cororaton reports that the decline in headship rate started in the 1980's, and has continued downward since, and cites slow wage growth, weak credit profiles, and the burden of student loan debt as potential causes.

Moreover, among the 25-34-year-olds who do form households, the fraction who decide to become homeowners at this period in their lives has also only modestly increased. The homeownership rate among the under 35-year-olds stood at 35.3 percent in the first quarter of 2018. The homeownership rate was on a modest upward path in 2017, dipped again in the first quarter of 2018, perhaps because homes have become less affordable and due to the lack of inventory of homes for sale in the lower price range.

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