Rising Unemployment Could Worsen Young Adults’ Housing Challenges

Younger adults are bearing the brunt of weak job growth. The unemployment rate for those aged 16–24 climbed to 10.5 percent in August, up 2.7 percentage points since 2022, exceeding the 0.7 percentage point growth among everyone in the labor force (Figure 1). These recent labor market difficulties compound the existing housing challenges that young adults face. Even before the uptick in unemployment, young adults struggled to form new households, had higher rates of cost burden, and were less likely to receive housing assistance despite having lower incomes. These conditions have likely worsened as the economic headwinds against young adults have only intensified. 

Figure 1: Unemployment Rates for Young Adults Have Increased Rapidly in Recent Years 

Source: JCHS tabulations of US Bureau of Labor Statistics, Current Population Survey. 

Of the 30.5 million young adults aged 18–24 in 2023, just 5.2 million headed their own household while another 1.9 million were the partner of the householder (Figure 2). A full 14.8 million lived with their parents and 2.6 million lived with some other relative. Over 3.3 million lived in group quarters, mostly college dormitories, and about 2.6 million lived with an unrelated householder.  

Figure 2: Most Young Adults Live with Relatives While Few Head Their Own Households  

Source: JCHS tabulations of US Census Bureau, 2023 American Community Survey 1-Year Estimates. 

The low rate of household formation among young adults reflects their lower levels of education, workforce participation, and independent financial resources. Even among those who were able to form a household, just a quarter had completed a bachelor’s degree. About one-third were currently enrolled in school (31 percent) and 8 percent were not in the labor force at all. As a result, nearly two-thirds of young adult households were low income (earning up to 80 percent of AMI), including two in five with very low incomes (earning up to 50 percent of AMI).  

With such low incomes in what is often a transitional stage of life, young adults are especially likely to rent and move frequently. A substantial 82 percent of young adult households rented in 2023 and over half (52 percent) had lived in their homes for less than a year.  

These dynamics all contribute to steep housing affordability challenges. More than half (54 percent) of all young adult households had cost burdens, spending more than 30 percent of their income on housing (Figure 3). The cost burden rate reached 58 percent for young adult renters, the highest of any age group, rising to 90 percent among very low-income renters.

Figure 3: Cost Burdens Are Highest for Young Adult Renters with Very Low Incomes 

Note: Cost-burdened households spend more than 30% of income on housing and utilities. 
Source: JCHS tabulations of US Census Bureau, 2023 American Community Survey 1-Year Estimates. 

Cost burdens were also high for young adult renter households headed by a person of color, given persistent discrimination and structural disadvantages. About two-thirds of young adult renter households headed by an Asian (68 percent) or Black (66 percent) person were cost burdened, followed by 58 percent of Hispanic renters. At 55 percent, rates were lower but still high for young white renters. 

Young adults enrolled in school account for a large share of cost-burdened households in this demographic. Young adults in school are more likely to forego income-earning opportunities in the near term with the hope of higher earnings in the future. Some use non-income sources like grants and loans to pay for their housing while some, though certainly not all, receive financial assistance from their parents to cover their costs. The ability to tap family resources likely exacerbates already-wide disparities in housing outcomes by income and race/ethnicity. The unique and varied circumstances of these households make it difficult to assess the challenges they face and develop appropriate policies to meet their needs. 

As it is, young adult renters were much less likely to receive crucial housing assistance despite their lower incomes and deep affordability challenges. Just 9 percent of young adult households earning under $30,000 annually received housing assistance, compared to 24 percent of all lower-income renter households. While some likely have family resources to draw from, young adult renters might also be disadvantaged in accessing assistance programs. Some programs give preference to household types viewed to have greater needs, including those with older adults or children. Long waitlists might discourage applicants, especially when young adults assume their incomes will grow beyond eligibility, and households may age out of young adulthood before receiving assistance. Frequent moves can further complicate meeting residency requirements or preferences for certain programs. 

Even in a strong economy, young adults face difficulties in the housing market as they navigate a transitional point in their lives. But a softening labor market and, by many measures, the most challenging housing market in history will only compound these difficulties. Given that some young adults can rely on parental support while others must compete unaided with better-resourced individuals in the housing market, the shortfall in public assistance only amplifies existing disparities. Some households, especially lower-income and young-adult households of color, are forced to live in housing that is beyond their means or otherwise unfit (distant, crowded, or even structurally inadequate). This underscores the need to better fund housing assistance programs that support income-eligible households at every stage of life.