Household Formation Drives Housing Demand

In 2021, we saw rapidly rising home prices and rents indicating strong demand for both owner occupied and rental units. This suggested a sharp increase in household formation.

Subsequent research indicated this was correct.

If we look at the Historical Households Tables (based on the Current Population Survey), we see that from 2010 to 2019, about 1.1 million additional households were formed each year. However, in 2020 due to the pandemic, the number of households declined by over 100 thousand.

Then household formation picked up in 2021 and 2022 but slowed in 2023.

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