Is Millennial Household Formation on the Rise?

Fleming: “The housing market is likely to benefit for the next decade from the demographic tailwind of Millennial homeownership demand.”

SANTA ANA, CA—Since the end of the recession, Millennials have been moving out of their parents’ basements and renting, but now they too want to buy, First American Financial Corp.’s chief economist Mark Fleming tells GlobeSt.com. In a recent report from the firm, Fleming says as more and more Millennials marry and have children—among the strongest determinants for the desire to be a homeowner—demand for housing will remain robust.

Fleming adds that while the housing market faces a dilemma that is restricting the inventory of homes for sale thanks to the increasing cost to finance a mortgage increases, wage growth has been at 2.5% over the past 12 months, and unemployment at its lowest level since May 2001. This means that economic conditions that favor Millennial household formation will continue to drive strong demand, despite decreasing affordability.