Thanks to stagnant incomes, Millennials are still missing from the housing market

Two million households headed by 25-to-34-year-olds are missing from the current housing market, according to new National Association of Homebuilders research.

The NAHB arrived at that number by analyzing the share of young adults living at home. Currently, more than 20 percent of young adults are choosing to live with their parents or parents-in-law; by comparison, less than 12 percent lived with parents in 2000.

The homeownership rate among young adults has dropped from 47 percent in 2006 to 37 percent in 2014, as more young adults have opted to live at home or become renters. One of the primary causes of that decline is a lack of income growth for young adults – the income gap has widened between young adult homeowners and those who stay at home with their parents. In fact, young adults living at home have had no significant income growth since 2000; according to NAHB, their median income has gone down, from $16,000 in 2000 to $15,000 in 2014.

Furthermore, the trend of larger shares of Millennials staying at home may be the new normal, thanks to different expectations of how long they should wait before buying a home. For example, Millennials are waiting longer than other generations to get married; in 1970, 49 percent of young adults were married with kids, compared to 20 percent in 2015, and according to NeighborWorks, 43 percent of people want to wait to get married before they make a home purchase.

Expectations Have Changed for Millennials

While it’s easy, in the face of such trends, to look at Millennials as being overly pessimistic, new research indicates that the opposite might be true – Millennials may have a more positive outlook on the future than previous generations.

In a Pew Research study, only 37 percent of Millennials have “quite a lot” of confidence in the future, less than Generation Xers and Baby Boomers polled. However, back in 1994, Generation Xers had a similar response when they were in the same position as Millennials are now. Only 30 percent of Generation Xers said they had “quite a lot” of confidence, much less than Baby Boomers and the Silent Generation. Baby Boomers had a response of 49 percent in 1975, but that was still far lower than the Silent and Greatest generations, marking a similar trend across the board. What this means is that, despite everything, Millennial confidence is on par with the trends of the previous generation.

In fact, Millennials are more optimistic than other generations, just in different ways. In 2014, 49 percent of Millennials said the U.S.’ best years were “ahead of us,” while 45 percent said they were “behind us.” With older generations, many more said that the best years were “behind” rather than “ahead.” Forty-two percent of Generation Xers said the best years were “ahead of us,” as well as 44 percent of Baby Boomers and 39 percent of the Silent Generation. While expectations have changed, perhaps the expectations of how long it takes for young adults to buy into the housing market have changed for Millennials, as well.