The Census Bureau recently released three surveys showing unprecedented household growth from 2019 through 2021. The average growth rate is between 2.0 and 2.4 million per year, significantly higher than the 1.4 to 1.5 million per year pace recorded from 2017 to 2019. According to Harvard’s Joint Center for Housing Studies, adults under 45 drive this growth.
One of the most notable trends is the increase in households headed by adults between the ages of 35 and 44. From 2016 to 2021, these households grew by 400,000 per year after declining by an average of 150,000 per year from 2011 to 2016. The pandemic has played a significant role in this increase. Remote work, faster wage growth, and low-interest rates have created an ideal environment for homebuying, particularly for millennials. As a result, their homeownership rates will have reached new highs by 2021.
Several economic factors in 2020 and 2021 have enabled many people, mostly millennials, to form and head new households. The unemployment rate dropped from 6.7 percent in December 2020 to 3.9 percent in December 2021, and wages were up 4.9 percent in 2021. Additionally, three rounds of stimulus payments helped many adults grow their savings for deposits or down payments. Furthermore, the pause in student loan payments left borrowers with an average of $200 per month to spend on other items. All these factors have enabled the release of years of pent-up demand for new households.
The pandemic has created an ideal environment for homebuying, and the economic factors have enabled many people to form new households. As a result, the number of households headed by adults under 45 has grown significantly, and homeownership rates have reached new highs. The future looks bright for the housing market as pent-up demand continues to be released.