Economists' Outlook

Housing stats and analysis from NAR's research experts.

Young Adults Are Returning to their Family's Homes, but for How Long?

The pandemic has provided many the opportunity to work remotely and even to move farther out to suburbs and small towns. However, for many young adults it meant returning to their childhood home. In 2020, the share of young adults aged 25 to 34 living at home grew to the highest share recorded since 1960: 17.8%. In 2021, the share of young adults living at home reduced to 17%, which is still the second-highest share recorded. Historically, between 1960 and 1980 the share of 25-to-34-year-olds living at home was less than 10%.

Some young adults may have recently moved back home due to the flexibility of remote work trends and to avoid paying high rents. Others may be at a family member's home due to job losses or while virtually attaining higher education goals. Regardless of the reason, living with family may provide a benefit to potential first-time home buyers.

Line graph: Share of young adults aged 25-34 living at home, 1960 to 2020

When examining the historical trends, first-time buyers are most likely to rent before purchasing a home. Since 2016, however, there has been an elevated share of buyers who are moving directly from a family member's home and into homeownership. In that recent timeframe, between 21% and 23% of first-time buyers are living with family before buying. This compares to 12% to 15% between 1989 and 1995 when NAR first started collecting the data series.

Bar graph: Prior living arrangement of recent first-time buyers, 1989 to 2021

For first-time buyers who lived at home first, about half are making rent payments to family. NAR does not collect whether or not this is fair market value rent, compared to contributing rental payments that may cover their share of utilities or groceries. By household composition it is more common for single first-time buyers to live with family before purchasing. For single women, they are less likely to contribute to financially when living at home, compared to single men who are more likely to contribute financially.

Bar graph: First-time Buyer Prior Living Situation by Household Composition

Not paying rent to family may help prospective buyers even more, as they can pay down existing debt, improve their debt-to-income ratio, and save for a downpayment later on. Among those with student debt, 38% of those said the pandemic did get them closer to paying down their debt. Among those who were able to get ahead on their debt, a portion of those debt holders cited that moving back home with family helped them financially.

While living at home may not be an ideal, or even a long-term scenario for many families, if prospective first-time buyers can move home before purchasing, this might financially help them save to purchase a home. The added flexibility of living with family allows a buyer to better navigate the tight housing market. The typical home that is listed received 3.8 bids. If the buyer loses out on housing bids and contracts, they can easily stay at home, without the added stress of a lease that could be close to expiring, or one that needs to be renewed.