Increase Expected in U.S. New Household Formation

May 4th, 2011
in econ_news

House_Moving Econintersect:  In the twelve months ended March, 2010 only 357,000 new households were formed (net number).  This was a record low for the history of the U.S. Census data base, which goes back to 1968.  The number is also nearly a million short of the ten-year average of 1.3 million net new households per year.  As a result of The Great Recession, by the end of March, 2010 there was a cummulative deficiency of 2.3 million net new households from the recession.  That implies a normal net new household formation rate without effects of The Great Recession would have been over 1.5 million per year.

Follow up:

According to Reuters, the net rate of new household formation for 2011 is estimated to be between 750,000 and 1 million.  That would be easily double the rate of the record low twelve months, but still only 50% to 67% of the normal rate.  From the Reuters article:

New households will help boost housing starts to about 648,000 this year and close to 900,000 in 2012 from 586,800 last year, estimates Brad Hunter, chief economist and national director of consulting in Palm Beach Gardens, Florida, for research company Metrostudy. The increase reflects a shadow demand for new homes among family members who have doubled up because of economic necessity, Hunter said.

Reuters identified some businesses that should benefit from an increase in new household formation.  Among these are:

It was estimated that new housing construction could increase from the 586,000 in 2010 to about 648,000 in 2011 and near 900,000 in 2012.  The 2012 estimate would be an increase of 50% over the 2010 construction rate, but only about half of the average for 2000-06 (1.75 million) and less than half the 2006 rate of 1.98 million.

Editor's note:  The news articles referenced did not discuss the nature of the new construction.  It may be that multifamily (apartment construction) may be a larger proportion than the recent historical norm.  The history is shown in the following graph:


Sources:  Bloomberg, U.S. Census Bureau and Realtor Mag  

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved