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“Adulting” is getting harder for younger generations, which is stymieing the housing market from reaching its full potential, according to Freddie Mac’s latest March Insight report. The report compares young adults to previous generations and the impact to household growth.  

“For today’s young adults, ‘adulting’ is hard because the economic environment has been tough in recent years; wage growth has been weak and housing costs have risen rapidly,” researchers note in the report. “On top of that, education and health care costs have skyrocketed.”

Compared to 2000, the average annual expenditures of young adults in 2016 has jumped 36 percent. The average annual expenditures on health care and education have more than doubled, according to the report.

Housing costs and labor market outcomes are the two biggest factors behind the decline in household formation rates among young adults, according to the insight report. From 2000 to 2016, real median home prices rose by 29 percent. However, young adult per capita incomes increased by only 1 percent. Further, the labor force participation rate for young adults has seen a “substantial decline in recent years, particularly for men,” researchers note.  Read More.