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Slow Pace of Household Formation Adversely Impacted the Housing Market
Recent research by the Federal Reserve Bank of Cleveland noted that the United States had a sharp slowdown in the pace of household formation from 2007 through 2010 relative to trend. This slow rate of household formation adversely impacted the housing market, as lower household formation rates reduce housing demand.
From 1997 to 2007, about 1.5 million households were formed on average each year in the United States. When the Great Recession hit, household formation averaged about 500,000 per year for the next three years.
As a result, there were 2.5 million fewer households formed between 2007 and 2010 with almost three-quarters of the deficit attributed to young adults (ages 18 - 34).
The study concludes that "the sharp decline in home ownership rates for the younger cohort shows little sign of recovering, suggesting that when young adults start forming more households, it may have a stronger impact on the demand for rental properties than owner-occupied housing over the near term."
Read the report.
Slow Pace of Household Formation Adversely Impacted the Housing Market
From 1997 to 2007, about 1.5 million households were formed on average each year in the United States. When the Great Recession hit, household formation averaged about 500,000 per year for the next three years.
As a result, there were 2.5 million fewer households formed between 2007 and 2010 with almost three-quarters of the deficit attributed to young adults (ages 18 - 34).
The study concludes that "the sharp decline in home ownership rates for the younger cohort shows little sign of recovering, suggesting that when young adults start forming more households, it may have a stronger impact on the demand for rental properties than owner-occupied housing over the near term."
Read the report.