The American Household Delayed
According to a recent report by the Census, married couples with children account for only 19.6% of all households in the U.S. The new figure represents a drop of 4.5 percentage points from 2000 when 24.1% of all households in the U.S. were married couples with children. The share of total households in 1970 was 40.3%.
As the share of households that include married couples with children decreased, one-person households and other household types rose. The share of one-person households increased from 17.1% in 1970 to 27.5% in 2012.
The dramatic decline in married households with children is due in part to delays in household formation. Researchers point out that Americans, on average, are waiting 5 years longer to get married when compared to 1970. Additionally, Americans are waiting longer to have children. The average age at first birth in 2006 was 25 compared to the average age at first birth age of 21 in 1970.
While delays in household formation place downward pressure on the demand for single-family homes, the increasing share of those living alone places an upward pressure on the demand for rental units. Trends in new multifamily construction suggest builders and developers may be taking delayed household formation into account. The share of multi-family homes built for rent increased from an historic low of 47% during the third quarter of 2005 to above 90% in 2013. Additionally, the size of units built for rent remains relatively small when compared to owner-occupied units. The median size of rental apartments was 1,081 square feet in 2012.
In fact, builder and developer sentiment about current conditions in the apartment and condominium market are at all time highs. In the second quarter of 2013, the Multifamily Production Index MPI increased nine points to 61. The (MPI) is measured on a scale of 0 to 100 so that any number over 50 indicates that more respondents report improving conditions than worsening conditions.
Although builders and developers appear to be well positioned to take advantage of the trends in household formation, it is important to recognize that delayed household formation does not mean these household are not eventually formed. Instead, many individuals will eventually marry and have children or form other household types.
Other household types (family and nonfamily) increased from 12.3% in 1970 to 23.9% in 2012. Other family households include one-parent families, about half of all respondents in 2012, with the remainder being families that include an unmarried householder and relative(s). The share of households that include couples without children has been remarkably stable, near 30%.
Source: NAHB Eye on Housing