Rising Youth Unemployment, Stalled Household Formation, and a Brutal Housing Market Create a Crisis Young Adults Can’t Outrun
Growing unemployment among young adults is compounding the housing challenges many face and increasing the likelihood that they will experience housing instability, according to a new report.
The unemployment rate among young adults aged 16 to 24 increased to 10.5% in August, which is up a full 2.7 points since 2022, according to a new analysis of economic data from Harvard’s Joint Center for Housing Studies. For comparison, all other workers experienced a 0.7% increase in their unemployment rates over the same period.
The unemployment rate for young adults is rising at a time when the U.S. labor market seems stuck in neutral. Although the economy added roughly 119,000 jobs in September, overall unemployment grew as employment rates in transportation, warehousing, and government sectors fell.
While the rising youth unemployment rate may seem like it’s part of the economy’s ebb and flow, researchers at Harvard warned that it could have a significant impact on young adults as they seek to form new households.
“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,” the report stated in part. “These conditions have likely worsened as the economic headwinds against young adults have only intensified.”
Household Formation and Homelessness
Household formation occurs when an individual leaves one housing unit and joins another, such as a youth leaving their parents’ house to live on their own. Economists often track household formation as a metric for determining the economic health of a given population. Higher levels of household formation often reflect higher educational attainment, workforce participation, and financial resources.
This metric can also be used to identify groups of people who are most at-risk of becoming homeless, as lower household formation rates often correlate with higher housing instability.
According to Harvard’s analysis, just one out of every six youths aged 16 to 24 was able to form their own household in 2023. Such a low household formation rate reflects the economic challenges faced by this age group.
For instance, the report found that nearly two-thirds of all young adult households earned low incomes, or around 80% of an area’s median income. Earning a low income contributes to the “steep housing affordability challenges” young adults face, according to the report. It can also make it more likely that these households will move frequently, thereby contributing to their housing instability.
“Even in a strong economy, young adults face difficulties in the housing market as they navigate a transitional point in their lives,” the report said. “But a softening labor market and, by many measures, the most challenging housing market in history will only compound these difficulties.”
Impact on Youth Homelessness
Unemployment and household formation rates can also help explain why youth homelessness has exploded across America in recent years.
According to the latest federal snapshot data, the number of children under the age of 18 who are experiencing homelessness grew by 33% between 2023 and 2024. About one-in-four people experiencing homelessness in the U.S. is under the age of 18, the data shows.
The number of unaccompanied youths—people under 18 who are homeless without a parent or guardian—grew by 37% up to more than 38,000 people.
Families with children also experienced a sharp increase in homelessness last year. There were more than 259,000 families with children experiencing homelessness in 2024, an increase of 28% from 2023, according to federal data.
SchoolHouse Connection, a nonprofit that serves homeless youths, explains that many homeless households with children stay in temporary settings or in motels. The nonprofit argues that these situations are not a “less damaging” form of homelessness, as some have argued. Instead, living in temporary settings is “associated with educational and health harms” that are comparable to unaccompanied youths.
“The increases in homelessness among families with children and unaccompanied youth are especially concerning because HUD’s numbers represent a very small fraction of the number of children, youth, and families who experience homelessness,” the nonprofit explained on its website.
Addressing the Challenge
Addressing the rising rates of housing instability and homelessness among America’s youths has proven challenging as well.
During the COVID-19 pandemic, state and local governments created housing assistance programs designed to prevent evictions and stem the rising tide of homelessness. However, few young adult-headed households received those benefits, according to Harvard’s analysis.
“Some programs give preference to household types viewed to have greater needs, including those with older adults or children,” the report stated. “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.”
These challenges underscore the need to make housing assistance programs more widely available across all age groups, the report added.
How You Can Help
The pandemic forced us to rethink housing in the U.S. and made one thing clear: targeted aid programs work. When service agencies had enough funding and clear guidance, they kept countless individuals, families, and unaccompanied youths housed during the crisis. This success highlights the urgent need for similar long-term solutions.
You can help break the cycle of youth homelessness by calling on lawmakers to expand and sustain these vital support systems. Urge them to establish dedicated state offices that:
- Directly address youth homelessness
- Provide pathways to education for homeless youths
- Strengthen community ties to support vulnerable young people
These initiatives will ensure that young people don’t just survive but thrive, giving them the resources they need to rebuild their futures.
Contact your representatives today and advocate for policies prioritizing the needs of homeless youths. Ending youth homelessness is the key to a brighter future for millions of young people—and you can be part of the solution.
