After 1850, the size of the average U.S. household began declining. But, this decade seems to be the first to break this lasting trend.
A steady decrease in the number of people living in the same home has been the norm throughout the years. For example, there were 5.79 people per household in 1790 and only 2.58 people per household in 2010. However, new data from the United States Census Bureau shows that this trend is changing; there was an average of 2.63 people per household in 2018.
Behind the climb in household size is a population increase unmatched by growth in the number of households. While the population living in households rose by 6% since 2010 – the smallest population growth since the 1930s – the number of households has increased by only 4%, going from 116.7 million in 2010 to 121.5 million in 2018.
Why Household Size Decreased in Last 160 Years
There are at least two trends that can be linked to the lasting decrease in the size of the average American household.
First, women have fewer children than they used to, so the size of the immediate family has decreased over the years. According to Pew Research Center, the total fertility rate of women in 1790 was 7.0 births. This means a woman gave birth an average of seven times during the course of her life. That number plummeted to 4.6 births in 1870 and further decreased to 2.2 births in 1940.
Another reason behind the decreasing trend is the rise of the nuclear family. This triggered a decline in extended family living arrangements and an increase in smaller households. Almost 70% of people aged 65 and older lived with their adult children in 1850; fewer than 15% did so by 2000.
The demographic changes also mirror more fundamental societal changes, including industrialization, rising living standards (especially for older groups), urbanization and constricted immigration in the first half of the 1900s.
Trends Behind This Decade’s Increase
The recent upturn in average household size reflects several demographic trends. For instance, the population residing in multi-generational homes has increased. In 1980, 12% of Americans lived in multi-generational homes; in 2016, that number rose to 20%. On average, these households have two more family members than other households.
Another trend is the increase in Americans living in shared homes. This type of arrangement refers to an extra adult – who could be an adult child, parent of the homeowner, roommate or boarder – living in the household. The number of shared homes has increased from 17% in 2007 to 20% in 2019.
While most age groups are living in larger households this decade, the change is more evident for adults aged 35 and older. In 2010, 64% of adults aged 35 to 54 lived in a household with three or more people; by 2017, it was 67%. This increase in households of three or more people is also common for adults aged 55 to 64.
Bigger Households: Good and Bad
The increase in household size might have serious implications for national economic growth and the U.S. real estate. Growing households could reduce the housing demand, and cause people to spend less on furniture, home appliances, and other home accessories. Generally, these larger households also foster a less-lively housing sector, with fewer home purchases and apartment leases, as well as reduced housing-related spending.
However, bigger households are usually advantageous for themselves. For example, the additional members could be working adults who pitch in with household income. Furthermore, the popular arrangement of young adults living with their parents is proof of the benefits of larger households.
The tendency for millennials to share a home has its roots in the financial concerns of their era; they are the generation recovering from the aftermath of the Great Recession. According to Business Insider, student loan debt and skyrocketing housing prices are pushing most millennials to delay purchasing a new home, moving to another city or starting a family.
In fact, student loans reduce by 10% the number of properties that the average buyer can afford. Moreover, first-time homebuyers will pay 39% more on their new home than homeowners did nearly 40 years ago. Consequently, young adults living with their parents is beneficial not only for parents avoiding poverty but also for millennials – giving them the time and space to save money and afford a place of their own.
If the pace of growth in household size remains steady, the average will most likely exceed 2.58 in 2020. The important factor is to strike a balance between the economic and personal benefits of larger households.