Reinventing Government -- Two Decades Later

A look back at Al Gore's efforts to bring private-sector efficiency into a more results-oriented federal space.

The team has long since disbanded, its Washington office on 17th Street Northwest now housing the Combined Federal Campaign, and its papers relegated to a website at North Texas University—complete with an alumni directory. That bygone entity? The Clinton administration's National Performance Review, which was re-christened during President Clinton's second term as the National Partnership for Reinventing Government.

What many recall as the 20th century's most visible effort to remake the federal government endures in the 21st in bits and pieces. That's because two succeeding administrations picked up only the components that fit their style, the march of technology rendered some revolutionary ideas quaint, and the public's respect for government, polls show, has trended nowhere but down.

The team of crusaders for smarter government was led by Vice President Al Gore. Their model came from a book by David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, published in time for the 1992 presidential campaign.

The reinvention gospel called for importing private sector efficiency techniques to make government more results-oriented and less costly. After an initial six-month canvass of agencies, the National Performance Review proposed 1,200 changes to “serve customers better,” relieve businesses of unneeded regulations, exploit technology to widen access to federal services and information, encourage plain English documents, improve coordination with state and local governments, cement community relationships, build new labor-management partnerships and empower front-line workers. The last included eliminating such “silly” things as employee time sheets.

In short, the N.P.R tried to make government cool again.

It was led by a rotating staff, some 250 federal employees still on home agency payrolls, which dwindled to about 35 to 45 after the initial effort was completed. They set out to identify government's high-impact agencies and set goals for each—targets that were adjusted after the Republican takeover of the House in the 1994 elections. And they circulated laminated cards spelling out the four principles of reinventing government:

- Putting customers (the American taxpayers) first

- Cutting red tape

- Empowering employees to get results

- Cutting government back to basics

“We focused on how the government works, not on what it should be doing,” wrote N.P.R deputy John Kamensky in an official history. “We chose to target the overhead costs, not the organizational structure, of agencies.” For the initial six-month push, Gore asked for recommendations that were “administrative changes, not proposals requiring statutory changes.” He warned that recommendations for further studies were not acceptable.

After two-thirds of the recommendations were adopted in the first Clinton term, the history says, the staff “assigned a 'champion' in the agencies to follow through on the implementation of each recommendation.”

What also unfolded during that seven-year period of deficit reduction and a post-Cold War defense drawdown was the elimination of 426,200 federal positions, according to a summary on the N.P.R's archival website.

The phrase “reinventing government” entered the wonk's lexicon, though some note that lately it's been in need of an update. “Clinton popularized the term during the '92 campaign, and it seemed newer and sexier than 'public administration reform,'” recalls Elaine Kamarck, the top policy aide to Gore and now a senior fellow at the Brookings Institution.

The phrase was “so branded with the Clinton effort, there was a search for another way to describe what it achieved,” says Max Stier, president and chief executive officer of the nonprofit Partnership for Public Service. “It's not a term I hear used in aspirational language bandied about today.”

Successors to Clinton's reinvention “did their own thing to differentiate it from what happened before,” says Donald Kettl, dean of the School of Public Policy at the University of Maryland. “Unquestionably there has been a large amount of reform fatigue—'so this is what they're calling it now, who knows what they'll call it next?'” he says. “That bit of cynicism is worsened by budget battles and shutdowns, so it's one more piece that makes federal managers weary.”

The Legacy

Perhaps the N.P.R's most concrete accomplishment was reforming the Internal Revenue Service, according to Bob Stone, the project's director and “energizer in chief” and now an adjunct professor at the University of Redlands in California. The government's evolution toward electronic tax filing was spearheaded by Bob Wenzel, then head of the I.R.S office in Fresno, Calif. Wenzel, Stone says, “was into reinventing government before it was cool.”

In 1994, electronic filing was “just a gleam in the eye,” Kamarck says, adding that now more than 70 percent of filers are doing it, and all developed countries execute a substantial portion of their tax collection online. “Of course, it would have happened anyway, but Gore's passion and tendency to be a futurist allowed the government—usually a decade behind the private sector—to be more in sync.”

Add to that feat improved treatment at hospitals run by the Veterans Affairs Department, says Paul C. Light, a professor of public service at New York University. “If you can get I.R.S and V.A to get better, you've done something. The enduring legacy is that government can get better, though I'm not saying it always did get better. Gore was a powerful source of honest assessment of what's wrong and what could be right. You've got to admire the notion of getting the vice president to take a real interest for eight years. There was a sense of purpose and support that federal employees received.”

Another durable achievement, says Stone, is a changed attitude toward business among government regulators and enforcers. For decades previous, the mind-set at the Environmental Protection Agency, the Food and Drug Administration and the Consumer Product Safety Commission was “them against the world,” he says. “At the N.P.R, we were crazy fanatics about the concept of customers. But people at those agencies said, 'We never refer to customers, everyone is a suspect.'” Still, Stone adds, there were some “subversives who understood that if you treat everyone as an enemy, you won't be very effective.”

Stone recalls being surprised that the N.P.R's meetings with chief executives at major corporations such as Dupont, Alcoa, General Electric and Disney showed that business people were put off by the regulators more than the regulations themselves. “They didn't like being treated like crooks. Many in industry actually want to do good,” he says, but some don't have sufficient engineering or legal staff to comply with regulations. “Agencies then took it upon themselves to educate” companies while reforming compliance processes.

Passage of the 1993 Government Performance and Results Act, notes Kamarck, is an example of the reinventing government initiative's influence on standard operating procedure. The N.P.R accelerated implementation of performance metrics under the law, so agencies could be evaluated and held accountable, she says.

"Most agencies set targets for performance for first time, which has created a long legacy," Kettl says. "Some real things happened in improving the function of the workforce. The Social Security Administration was tremendously successful at changing the way they interact with citizens."

In 1997, Gore published Access America: Reengineering Through Information Technology, which "laid out a vision of how the Internet would transform government and services," Kamarck says. The strategy built on the tenets of the Government Information Technology Services Board and the Chief Information Officers Council, which had just been created.

The Reinventing Government Partnership also co-sponsored the creation of the FirstGov dot gov website, a compendium of links to federal information that evolved into what is now U.S.A dot gov. The Harvard University Innovations in American Government Awards program honored the site in 2003, and in 2007 Time magazine named it one of the “25 Sites We Can't Live Without.” Along with online documents came the effort to rid federal communication of “gobbledygook,” Kamensky adds, which paved the way for the 2010 Plain Writing Act.

The effort also institutionalized organizational changes later enshrined in executive orders and statutes: the creation of the President's Management Council; performance-based pay for the Senior Executive Service; the anointment of deputy secretaries as chief operating officers; and the annual Federal Employee Viewpoint Survey, spearheaded by the Office of Personnel Management.

Shrinking the Workforce

Another Clinton-Gore team goal—shrinking government—turned out to create problems, Kettl recalls. “The reduction didn't happen in a way that matched workforce needs because they used a strategy for downsizing to hit a target,” he says. “The effort got in the way of the 'making government work better' piece. Many with special skills left, and people who stayed might have been those we'd have wanted to leave.”

An unintended consequence was that “bench strength was lost, particularly in Pentagon acquisition,” says Stier, who contends the damage remains visible today.

The N.P.R's view, Stone says, was that “roughly one of three federal employees had the job of interfering with work of another two. We called them the forces of micromanagement and distrust, and we wanted to reduce the number of inspectors general, controllers, procurement officers and personnel specialists.”

Stone wanted a no-layoff policy, but did not succeed. He says he was able to get the Office of Management and Budget and O.P.M to support a large-scale buyout program that offered employees incentives of up to $50,000 to leave. Only about 25,000 of the more than 420,000 jobs cut came as a result of layoffs, while many offices in “the hinterlands” were closed, Stone adds.

The Bush Undoing

When George W. Bush entered the Oval Office in 2001, there was a “noticeable chilling” toward reinventing government, Light recalls, citing a return to the Reagan-era notion that “the problem with government is government.” The Bush team didn't like bureaucracy and favored outsourcing, he says. Many reinvention efforts were undone, such as the overhaul of the Federal Emergency Management Agency. That led to the widely criticized federal response to Hurricane Katrina in 2005, according to Light.

But Robert Shea, a top O.M.B official under President Bush and now a principal with Grant Thornton L.L.P, says the Bush team was careful “not to throw out the baby with the bath water.” Criticism of the reinventing government formula was threefold, he says. “It was not aligned with the major challenges, it didn't tie budgets to each agency's commitment to improving management, and there wasn't a lot of rigor behind the progress reported and savings achieved,” he says.

Much of this was borne out by reports from the Government Accountability Office and Congress, says Shea, who was a Senate Governmental Affairs Committee staffer during the N.P.R movement. According to Shea, many Clinton management reforms were viewed as not yet refined, and Bush opted to centralize their coordination and narrow the focus to five buckets: human capital, competitive sourcing, financial performance, electronic government, and budget and performance integration.

"Everything Bush's team did was based in some way on work being done by Reinventing Government," he says, citing the 2002 E-Government Act as an example. But during the transition from Clinton to Bush as well the one from Bush to Obama, Shea says, "we lost a lot of progress that had been made by wanting to put a new cover on the agenda."

In many ways, “Bush started out in a very positive direction,” Kamarck says, noting he retained the President's Management Council. But then he “went backwards in dismantling the labor-management partnerships,” she argues. The Gore team “was proud of our relationship with unions,” Kamarck adds.

Stone recalls urging contacts in the new Bush White House to “find out what we're doing, so you will know what priceless assets you have to nourish and what subversives you have to discourage.” The response was that Bush believed in an “old-fashioned business model in which you give someone a job to do and leave them alone—that Bush believed in delegation and was not interested in the N.P.R,” Stone says. But, he adds, “just saying what the policy is doesn't mean much if you're disconnected from what federal employees are actually doing.”

Bush did a better job of engaging political appointees, says Kamensky. "He had all these people's hearts and souls, and they signed off on Bush's Presidential Management Agenda items and were committed in ways you never saw under Clinton," Kamensky says. He agrees, however, with the view that Bush did not pick up on Clinton and Gore's recognition of front-line innovation.

Making Government Cool

In the 21st century world of social media and online customer reviews, “any organization, private or public, that is riding off an approach from 20 years ago would be stale and unresponsive,” says Stier. Today the issue is “how to create a nimble government able to keep up and lead in a changing world,” he says. But Stier remains impressed with the visibility Clinton and Gore gave reinvention. “If you want to drive change in government, it has to be top leadership's priority,” he says.

Light regrets the reinventors “could not bring themselves to take on civil service reform,” which Washington is still dealing with, he says. But knowing now what came afterward, he looks back with admiration for the Clinton-Gore tenacity. “Gore didn't make government cool again,” Light says, “but he made good management important for a while.”

Kamarck says much of President Obama's management reform effort is "in the same mode." She envies the way advances in I.T, such as releasing government databases so the public can innovate on its own, have allowed Obama to move in new directions. Any major reform also "requires taking the time to get to know the federal workforce," she adds. "If you're hostile to the workforce, you won't learn anything useful."

At the working level, the reinvention of government has continued regardless of the administration, Stone says. “It's like getting hospital workers to wash their hands. People haven't gone back to not washing their hands. There's been a change in the fundamental understanding of governing.”

Reinventing government: Reflections 30 years later

Three leaders of government reinvention under Vice President Al Gore reflect on their favorite accomplishments and what they see as challenges for leaders of the future.

On September 7, 1993, Vice President Al Gore presented his final report, “From Red Tape to Results: Creating a Government That Works Better and Costs Less” to President Bill Clinton in a ceremony on the South Lawn of the White House before his Cabinet, members of Congress, and hundreds of civil servants who helped craft the report and its recommendations.

Looking back, three of his top advisors reflect on the accomplishments of the Reinventing Government initiative and what they see as key management challenges looking ahead.

- Elaine Kamarck served as a senior advisor to the vice president for Reinventing Government (1993 to 1997)

- Bob Stone served as the initial project director and energizer-in-chief for the National Performance Review (1993 to 1998)

• Morley Winograd served as director of the National Partnership for Reinventing Government (1997 to 2001)

What accomplishment are you most proud of from the National Performance Review?

Kamarck: I'm most proud of the fact that the reinventing government efforts of the Clinton years led the federal government's transition into the information age. Whether it was slimming down layers of management, reforming procurement of information technology or focusing on customer service – most of those efforts remain today as standard operating procedures of the federal government.

Stone: I'm most proud of changing the culture of many of the government's regulatory and enforcement agencies. They were all a little different, but they changed from being adversaries to being partners with the businesses and individuals they oversaw. Nobody at N.P.R invented, or conceived this change: renegades in the civil service were doing this out of the sight of their headquarters masters. Renegades like:

- Lynn Gordon at Customs and Border Protection, who changed the Miami airport operation to distinguish between smugglers and law-abiding importers and travelers.

- Bob Wenzel at the Internal Revenue Service, who changed the Fresno office to help taxpayers pay what they owed instead of treating all as likely cheats.

- Joe Thompson at the Veterans Affairs Department who changed the New York office to treat vets as valued customers.

- Marie Urban at the Food and Drug Administration, who taught her inspector force to help companies pass inspections.

- Joan Hyatt at the Occupational Safety and Health Administration, who “signed up to protect the American worker,” and showed the agency how to do far better.

- Marjorie Buckholtz at the Environmental Protection Agency, who returned former brownfields to productive use by substituting common sense for bureaucratic rigamarole.

N.P.R's role in this great transformation was to find the renegades, show them off to the rest of government as true reinventors, get Vice President Gore to sprinkle his fairy dust over them and protect them and their initiatives from often hostile headquarters.

Winograd: Creating the first customer satisfaction measurements of the federal government's performance in the nation's history. Creating these measurements allowed us to reinforce the agency leader's need to pay attention to how their services were being delivered from the customer's point of view. It led to many changes in fundamental operations, such as the I.R.S moving to an all-electronic service capability and to Social Security Administration offices around the country making sure their waiting times were shorter.

As the Pew study on trust in government showed, these kinds of performance improvements are what builds trust in government, one day at a time. In today's highly polarized and cynical world, it is essential that we do more of this type of constant measurements of customer satisfaction in the delivery of federal government services, to provide a foundation on which to build higher levels of trust in our democratic form of government.

Looking ahead, what do you think is the biggest management challenge facing the federal government?

Kamarck: I'm still bothered by the fact that everyone has to file income tax returns. Way back in 1994 we published a paper, written by Greg Woods, outlining how, for the vast majority of Americans, the government could reconcile their taxes with a postcard. Back then the technical challenges were big and the plan more of a pipe dream. But today there's no reason why we shouldn't go back to this goal and allow Americans to file taxes easily.

Stone: The biggest management challenge facing the federal government is to harness the talent and enthusiasm of its workforce. Every cabinet and subcabinet member needs to go see workers, in their workplaces, and ask what would make them happier and more effective in their work; then do what they say. Yogi Berra once wisely said, “If people don't want to come to the ballpark, nobody's gonna stop them.” Yogi's advice applies to workers, too: If workers don't want to give their best, nobody's gonna stop them. It's the number one job of management to get them to want to give their best.”

Winograd: The biggest management challenge facing the federal government is bringing a greater sense of accountability at all levels of our government. The 1993 Government Performance and Results Act was implemented during my tenure as director of N.P.R, which was a good legislative framework to encourage a heightened sense of accountability for results on the part of government agencies, but it received only lip service from the leadership at the Office of Management and Budget, leaving the bureaucratic culture focused on inputs and activities instead of outputs and outcomes pretty much intact.

Even though President Bush's O.M.B did better to focus agencies on their gpra measurements, at the lower levels of the bureaucracy accountability remained pretty much a foreign virus that the culture rejected. It is good to see President Biden's interest in making sure things get done based on his own experiences as vice president, but there is little public evidence that he is using his current chief of staff's own track record of delivering results to reinforce the need for further cultural change from the top levels on down to the front lines of our federal government when it comes to accountability for results.

How a pair of executive orders and a memo could fast track the civil service's politicization

By Erich Wagner

January 21, 2025

The Trump administration's Day 1 executive actions governing federal workforce issues could collectively kickstart the new president's efforts to politicize the nonpartisan civil service, beginning with a potential “mass layoff” of recent agency hires, good government experts said Tuesday.

As part of a tranche of executive actions either setting new policy or revoking Biden-era initiatives issued upon his inauguration Monday, President Trump revived Schedule F, albeit under a slightly different moniker— {Schedule Policy/Career} . Like the first iteration of the policy, unveiled in October 2020 but never implemented, it aims to reclassify tens of thousands of federal workers in so-called "policy-related" positions out of the competitive service, stripping them of their civil service protections and making them effectively at-will employees.

There are some changes from the original Schedule F executive order: first, it strips much of the language regarding exempting Schedule F positions from the competitive hiring process. And in various places it moves the final decision-making authority for conversion of jobs into the new job classification to the president, rather than the Office of Personnel Management director, likely in an effort to make it easier to ward off legal challenges.

The National Treasury Employees Union has already filed a lawsuit seeking to block the Trump administration from moving forward with implementing Schedule F, arguing that when Congress passed the 1978 Civil Service Reform Act, it defined “policy-related” positions specifically as political appointees, not career workers, and that excepted service job schedules should be “narrowly defined.”

“Congress has enacted comprehensive legislation governing the hiring and employment of federal employees,” the union wrote. “When establishing hiring principles, Congress determined that most federal government jobs be in the merit-based, competitive service. And it established that most federal employees have due process rights if their agency employer wants to remove them from employment. Because the Policy/Career executive order attempts to divest federal employees of these due process rights, it is contrary to congressional intent.

Replacing the original Schedule F's hiring process changes is a new executive order entitled Reforming the Federal Hiring Process and Restoring Merit to Government Service. Max Stier, president of the Partnership for Public Service, positively cited the measure, which tasks officials with developing a hiring action plan to reduce the time it takes to hire new federal employees, better communicate with job applicants throughout the process and better incorporate technology into the hiring and selection process.

“I think there's clearly been a lot of work and thought done here at the end of the day,” he said. “The fact is there are some things that we think are quite positive, like the proposed reform of the hiring process, which is indeed quite broken.”

But Don Kettl, professor emeritus at the University of Maryland and former dean of its School of Public Policy, warned that there are worrying passages within that order as well. In addition to language denigrating concepts like equity and gender identity, it calls for ensuring federal jobseekers "faithfully serve the executive branch," in addition to the existing oath to defend the Constitution.

“It's a loyalty test, to both the administration and to its values,” Kettl said. “It's an opportunity in the screening process to ensure that the people hired are aligned with what they want to advance, an effort to transform government to match Trump's basic values from the very {start.} ”

Jacque Simon, policy director for the American Federation of Government Employees, said that her union is always opposed to efforts to make the hiring process “more subjective.”

“If you look at the language of this hiring executive order, where they're talking about making sure you only hire Americans 'dedicated to . . . ideals and values,' you have to wonder how that's going to be measured and assessed,” she said. “In the competitive service, objective criteria are supposed to be the only factors considered, and it sounds like these are very subjective matters, which opens the system up to discrimination.”

Another troubling development came in the form of a Monday night memo from Acting O.P.M Director Charles Ezell, which calls on agencies to submit a complete list of employees still within their one-year probationary periods by Friday. It also stresses that probationary employees lack appeal rights before the Merit System Protection Board and encourages agencies to use paid administrative leave to send employees home while they consider restructuring offices and components.

Kevin Owen, a partner at the law firm Gilbert Employment Law, said he took O.P.M's memo as a signal that the administration may seek to use probationary employees as a way to fulfill Trump and his confidant Elon Musk's promise of "mass layoffs" of federal workers.

“I think that is a precursor to their pledge to reduce the size of the federal government, and an easy target to make those reductions are the people with no rights and who were hired by the last guy,” Owen said. “And I think it sets a precedent that will allow future administrations to do the same going forward. That may invite Congress to step in and change that rule in the future—not this Congress, but a future one—because this will start to encroach more and more into a spoils system as time goes on.”

And Ron Sanders, a former chairman of the Federal Salary Council who resigned his post in 2020 after Trump unveiled the first iteration of Schedule F, described the O.P.M memo as the first in a pair of shoes to drop.

"The second shoe is that once those lists are in place, those probationary workers are at risk," he said.

Homebuying Intentions Decline Further in U. S.

Washington, D.C. — The share of U.S. non-homeowners who expect to buy a home within five years has dropped to 25%, the lowest Gallup has measured in seven readings since it began asking the question in 2013.

Another 28% of non-homeowners now say they expect to buy a home within 10 years, and 45% do not think they will do so in the foreseeable future.

Between 2013 and 2018, non-homeowners' intentions to buy a home within five years were much higher than they are now, ranging from 41% to 49%. When Gallup next asked the question in {2025} , that figure had dropped to 30%.

The poll finds that 61% of Americans say they own their primary residence, while 34% rent. Homeownership in the U.S. has averaged 61% in Gallup polls since 2012, down from 70% between 2001 and 2011.

The latest findings come from Gallup's annual Economy and Personal Finance poll, conducted April 1 to 15, a period when the median home price hovered around $409,000 and mortgage rates, while somewhat lower than a year ago, remained well above the historic lows of 2020 and 2021. Americans' views of the nation's economy and their outlook for their own financial situation have also worsened. Taken together, these conditions help to explain why many non-homeowners see purchasing a home as increasingly out of reach.

The decline in near-term homebuying intentions is most pronounced among younger non- homeowners, who would typically be the most likely first-time buyers. Two-year combined averages of the data show that just 29% of non-homeowners aged 18 to 34 in 2025 and 2026 say they expect to buy a home within five years, down from 57% in 2013 and 2015 and 53% in

2016 and 2018.

At the same time, the share of young non-homeowners saying they will not buy in the foreseeable future has more than doubled, from 13% to 30%. Notably, however, the share expecting to buy within 10 years has risen from 27% to 41%, suggesting younger non-homeowners have not abandoned the idea of buying a home but are pushing their timeline out significantly.

Another factor that makes the housing market difficult for would-be buyers is a lack of inventory. Currently, 18% of homeowners say they plan to sell within the next five years, 16% say within the next 10 years, and 65% say they are unlikely to sell in the foreseeable future.

Most Continue to Think Housing Market Is Bad

These challenges appear to be influencing how Americans view the housing market more broadly, as 29% say now is a good time to buy a house, while 67% say it is a bad time. This is the fifth consecutive year that a majority of U.S. adults have seen the market as unfavorable, a stark shift from most of the previous two decades when solid majorities were positive about homebuying. Still, the percentage of Americans saying it is a good time to buy a house has risen from its record low of 21% in 2023 and 2024.

Majorities of all major demographic groups think it is a bad time to buy a house, but there are differences within some groups. The widest gap in views of the housing market falls along partisan lines, with Republicans and Republican-leaning independents (41%) nearly twice as likely as Democrats and Democratic-leaning independents (22%) to say it is a good time to buy a house. The gap likely reflects the change in presidential administrations, as partisans' views of the economy and major institutions tend to improve when their party occupies the White House. Two years ago, 18% of Republicans and Republican leaners said it was a good time to buy a house.

In addition, women, young adults aged 18 to 34, and adults living in the Eastern U.S. are less likely than their counterparts to say it is a good time to buy a house.

Views of the housing market are broadly consistent across other key demographic subgroups, including income levels and urbanicity.

Expectations for Local Home Prices

Americans are largely in agreement about where home prices are headed, with 65% expecting prices in their area to increase over the next year, up eight percentage points from 2025. Meanwhile, 22% of U.S. adults believe prices will stay the same and 12% think they will fall.

Majorities of U.S. adults have predicted that home prices would increase since 2013, aside from {2020} . That year, pandemic uncertainty pushed that figure down to 40%, while the share expecting prices to fall rose to 25%. Between 2008 and 2012, more Americans thought home prices would stay the same than increase.

City residents (71%) are more likely than their suburban (62%) and rural (61%) counterparts to expect an increase. Young adults aged 18 to 34 (79%) are also much more likely than 35-to 54-year-olds (64%) and those aged 55 and older (57%) to think home prices will rise. There are, however, no significant differences in views of Americans living in different regions of the country.

Bottom Line

Despite some signs of improvement, the U.S. housing market remains deeply challenging for would-be buyers amid increased economic anxiety, with home prices and mortgage rates remaining well above what many can afford. At the same time, the homeowners who might otherwise provide inventory show little intention of selling, keeping supply tight and prices elevated. Young adults appear to bear the brunt of this, with many pulling back on homebuying intentions in the near future.

Homeownership Among Young Adults Has Fallen, and It's Worse Than You Think

As housing has become less affordable, young adults are feeling the pinch the most. The homeownership rate among adults ages 25 to 34 is lower than for previous generations at the same age, and more attention has been directed toward alternate ways young adults might purchase a home. But even this dire situation may be worse than it seems.

According to the American Community Survey, the homeownership rate for household heads ages 25 to 34 declined sharply following financial crisis—from 47 percent in 2005 to 37 percent in 2015—before partially recovering to 40 percent by 2024. But this conventional measure overstates the extent of the recovery.

The traditional homeownership rate is calculated as the share of households that are owner occupied. This measure excludes young adults who have not formed independent households, such as those living with parents, other relatives, or roommates.

Because independent household formation declined substantially between 2005 and 2017 and has only modestly recovered since, the exclusion of these young adults masks the “true” homeownership rate. If we do consider these individuals, the decline in homeownership over the past two decades is roughly double what the traditional measure suggests.

Young adults are less likely to form independent households

In 2005, just 12 percent of young adults lived with their parents. A decade later, 21 percent did. Since then, the share has stayed relatively stable, with 20 percent of young adults living with their parents in 2024. Similarly, the share of young adults living with others, such as roommates, significant others, or family members other than parents, increased from 14 percent in 2005 to 19 percent by 2015, dropping slightly to 18 percent in 2024. At the same time, the share of young adults who are homeowners (as household heads or spouses) fell sharply from 40 percent in 2005 to 26 percent in 2015, recovering only partially to 29 percent in 2024.

Notably, the 2019 to 22 period, which was characterized by historically low interest rates, saw slight increases in household formation and homeownership among young adults. But this trend reversed between 2022 and 2024 as interest rates rose, underscoring the sensitivity of young adult housing outcomes to worsening affordability.

Young Adults Are More Likely to Live with Parents or Others Than Form Independent Households

Source: The Decennial Census and the American Community Survey. Notes: “Live with others” includes roommates, significant others, and family members other than parents.

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Marital status plays a critical role in living arrangements

The marriage rate among young adults has steadily declined over the past two decades, with the share of married individuals falling from 53 percent in 2005 to 38 percent in 2024. Because married young adults are far more likely to be homeowners than those who have never married or who were previously married, this decline could partially explain the falling homeownership rate.

Looking at the data conditional on marital status, the share of homeowners shows a stronger recovery than aggregate figures suggest. Among married young adults, the share of homeowners fell from 61 percent in 2005 to 49 percent in 2015 but rebounded to 56 percent by 2024. Trends for previously married and never-married young adults follow a similar pattern, though with more modest recoveries. These data indicate that delays in marriage do partially explain the slower recovery in homeownership since 2015.

But all marital groups were less likely to form an independent household in 2024 than in 2005, with those who have never married being the least likely. Married young adults are consistently the most likely to form independent households, which also suggests that delayed marriage has contributed to the past decade's slow rebound in household formation rates.

Delayed Marriage Rates Could Contribute to Slowing Household Formation Rates

Source: The Decennial Census and the American Community Survey.

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What do these trends mean for the homeownership gap?

Standard homeownership metrics obscure two important dynamics. First, owner-occupied households tend to be larger—that is, married couples are more likely than single people to own a home. This biases household-based homeownership rates downward relative to an individual-based measure, as the couple and the single person each count as one household. Second, and more importantly, the exclusion of individuals who haven't formed independent households pushes homeownership rates upward, as these people are not included in the denominator.

At the individual level, the share of young adults who are homeowners declined from 40 percent in 2005 to 29 percent in 2024: an 11 percentage-point drop. This “real” homeownership rate is substantially lower than the traditional homeownership rate measured at the household level, and it indicates a larger deterioration in homeownership over time.

Roughly half the decline in the real homeownership rate is attributable to reduced household formation. If the share of young adults forming independent households had remained at 75 percent (instead of declining to 63 percent), the 2024 homeownership rate would have been 34 percent rather than 29 percent.

The “Real” Homeownership Rate for Young Adults Has Drifted Further Below the Traditional Rate

Source: The Decennial Census and the American Community Survey. Notes: The traditional household rate is the number of owner-occupied households with heads ages 25 to 34 divided by the number of households with heads ages 25 to 34. The person-based real rate is the number of people ages 25 to 34 who own a home divided by the number of all people ages 25 to 34. The fixed independent households real rate is the person-based real rate times the head or spouse share in 2005 divided by the head or spouse share.

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Policymakers need to address broader constraints on household formation

These findings suggest that improving young adult homeownership requires going beyond mortgage access to address the broader constraints on household formation. Affordability remains a central driver. The reversal in both household formation and homeownership between 2022 and 2024 highlights how sensitive young adults are to rising costs and interest rates. Expanding the supply of entry-level housing, lowering barriers to new construction, and supporting pathways into independent living can help make housing costs more affordable.

Demographic shifts, particularly the decline and delay in marriage, also indicate that housing policy and mortgage systems may need to better reflect the realities of single and nontraditional households. This could look like creating smaller, less expensive units or expanding co-buying programs for friends or extended families.

Several important questions remain. More research is needed to disentangle the causal relationship between marriage, economic stability, and homeownership and to understand the key drivers of delayed household formation. Affordability pressures can partially explain these trends, but {other factors} , such as labor market conditions, rising child care costs, and shifting housing preferences, play a role.

It is critical to examine how these trends vary across demographic and geographic groups and whether delayed entry into homeownership leads to permanently lower lifetime ownership rates.