{"id":15143,"date":"2026-09-22T15:03:28","date_gmt":"2026-09-22T15:03:28","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=15143"},"modified":"2026-09-22T15:03:30","modified_gmt":"2026-09-22T15:03:30","slug":"how-much-housing-demand-in-the-us-still-lives-at-home","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/us-analysis\/us-featured-analysis\/how-much-housing-demand-in-the-us-still-lives-at-home\/","title":{"rendered":"How much housing demand in the US still lives at home?"},"content":{"rendered":"\n
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For decades, the housing market served as America’s economic bellwether\u2014a leading indicator that signaled where the broader economy was headed and a powerful engine of growth. But since 2022, housing has undergone a quiet demotion.<\/p>\n\n\n\n

It has consistently dragged on gross domestic product growth, and it no longer meaningfully moves the dial on an economic cycle now dominated by an AI buildout and high-end consumer.<\/p>\n\n\n\n

The conventional explanation is straightforward: Stuck supply and interest rates have kept affordability weak and prices elevated, pricing out buyers and dampening demand<\/a>.<\/p>\n\n\n\n

But, there’s another factor at play\u2014a demographic wildcard that deserves closer attention. Millions of priced out young adults, who have weathered a surprisingly tough entry-level job market, are stuck living at home with their parents. Could their eventual move into independent households unlock a hidden reserve of housing demand?<\/p>\n\n\n\n

To assess this tailwind, we tapped the U.S. Census Bureau\u2019s American Community Survey (ACS) to estimate how much additional housing demand could come from young adults living with their parents as they move out and form independent households. We identify three key points:<\/p>\n\n\n\n

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    A normalization in the living-at-home rate could unlock roughly 675,000 units of incremental housing demand\u2014meaningful\u2014but not a silver bullet for this cycle.<\/p>\n<\/li>\n\n\n\n

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    Demand is positioned to flow into the rental market disproportionately, good news for a rental market sitting at 7.3% vacancy rate.<\/p>\n<\/li>\n\n\n\n

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    Affordability and labor conditions, not demographic shifts like delayed marriage, are limiting household formation.<\/p>\n<\/li>\n<\/ol>\n\n\n\n

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    Housing remains in a deep freeze due to affordability constraints<\/strong><\/p>\n\n\n\n

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    Household formation can offer incremental demand for rentals<\/h3>\n\n\n\n
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    Emerging household formation is disproportionately likely to flow into rental housing unless financing conditions change, according to our analysis.<\/p>\n\n\n\n

    We estimate about 22% of young adults (aged 25-35) reported living with a parent, grandparent, or parent-in-law in 2025 (we refer to this group collectively as LWP). This share is below the pre-pandemic peak of nearly 24% but is still slightly above that of the past five years, and notably above the early 2000s.<\/p>\n\n\n\n

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    Living-with-parents share has retreated from 2017 peak<\/strong><\/p>\n\n\n\n

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    A 22% share of young adults living with parents represents roughly 10 million people who could buy or rent a new home. If the entry level labor market normalizes enough to pull that share down by just 2 percentage points, we estimate roughly 675,000 units of incremental housing demand.<\/p>\n\n\n\n

    Applying each group\u2019s observed preferences from the ACS implies an overall 66\/34 rent-to-own split in this additional demand\u2014more renter heavy than recent aggregate household growth. Owner-occupied households accounted for roughly 63% of annual net new households (867,000 new owner households versus 497,000 new renter ones) on average in the past four quarters.<\/p>\n\n\n\n

    Critically, the rental market can absorb this demand. Elevated multifamily completions from the 2021-2022 construction boom pushed vacancy rates to 7.3%\u2014the highest since 2019\u2014and rent growth has decelerated from its peak in 2023.<\/p>\n\n\n\n

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    Affordability and labor conditions are key constraints on forming households<\/h3>\n\n\n\n

    We place more weight on the aggregate affordability and labor market story as an indicator for housing demand, and expect the homeownership rate for young adults will remain near current levels as renter-occupied households outpace owner-occupied formation in the near term, because of affordability hurdles. Here are three reasons why:<\/p>\n\n\n\n