Research on Pent-Up Housing Demand

There have been numerous estimates circulated of excess for-rent and for-sale housing supply, including one estimate of 3 million units by New York Federal Reserve President William Dudley.

This inventory of mostly existing homes (inventories of new construction are at historical lows – the Census Bureau estimates 190,000 units as of December 2010, down from 572,000 units in June 2006) are often cited as hurdles to new housing construction from growing from current depressed levels.

However, this excess supply is only half of the equation. There is also considerable pent-up housing demand or delayed household formations that have not yet been formed due to current economic conditions.

A new NAHB study by David Crowe, Robert Denk and Robert Dietz quantifies this level of pent-up demand.

Since 1965 the number of households in the U.S. has been growing at about 1.5% per year. Between 2000 and 2007, the household growth rate was approximately 1.0%.

Applying the 1.0% rate against the 2007 Census measure of total households and comparing this trend level to the Census household counts for recent years yields an estimate of 2.1 million missing but expected households that have been delayed due to the Great Recession. Conceptually, these are younger workers who are still living at home with their parents and individuals who have doubled up with roommates due to an uncertain economy.

As the labor market improves, these potential households will be unlocked, helping to reduce the excess supply of housing – perhaps faster than many analysts expect.

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37 Responses to Research on Pent-Up Housing Demand

  1. [...] This post was mentioned on Twitter by NAHB Education, NAHB Public Affairs. NAHB Public Affairs said: New #NAHB study quantifies pent-up housing demand http://nahb.bz/fTmZAM #housing #economics [...]

  2. The young eduacated have been raised with a silver spoon. They will want to have privacy and their own stuff. These potential households will generate with their first job and be off to rent and or buy.

  3. [...] Crowe pointed to several factors indicating that the housing market should show modest improvement in the coming months: an improving economy and continued employment growth, low mortgage rates, stabilizing home values and three years of below-trend household formation rates that has created 2.1 million households of pent-up housing demand. [...]

  4. [...] believed that some amount of the to 1.5 million to 2.1 million in “pent-up households” that demographers see as the variance between household formation trends and actuals for the [...]

  5. [...] This effect in turn is holding back housing demand among younger homebuyers who would add new net households and help absorb excess supply. We have previously discussed delayed household formation, and how it constitutes a growing shadow demand for housing. [...]

  6. [...] This effect in turn is holding back housing demand among younger homebuyers who would add new net households and help absorb excess supply. We have previously discussed delayed household formation, and how it constitutes a growing shadow demand for housing. [...]

  7. [...] we discussed before, we believe there exists a shadow demand for housing in the form of about 2 million delayed household formations as a result of the Great Recession. Later this year, this demand will push the rental vacancy [...]

  8. [...] purposes is restrictive. Even in areas of the country where home prices are stable or growing and demand exists for new construction, the lending environment is challenging, which constrains residential construction’s [...]

  9. [...] As we have noted before, with credit channels tightening for homebuyers and blocked for many small businesses, the construction sector is unlikely to assume its usual role in leading the economy out of recession, despite evidence of pent-up housing demand. [...]

  10. [...] As we have noted before, with credit channels tightening for homebuyers and blocked for many small businesses, the construction sector is unlikely to assume its usual role in leading the economy out of recession, despite evidence of pent-up housing demand. [...]

  11. [...] to unlocking pent-up housing demand, the poll findings indicate that for renters, the biggest challenges to homeownership are: [...]

  12. [...] the multifamily sector before the single-family market. NAHB estimates that there are approximately 2.1 million potential households that constitute pent-up housing demand, and these deferred household formations will emerge as renters before existing [...]

  13. [...] with the proposition that once economic conditions improve, particularly in the labor market, pent-up housing demand will be unlocked for both rental and owner-occupied housing. For example, 85% of renters in the [...]

  14. [...] with the proposition that once economic conditions improve, particularly in the labor market, pent-up housing demand will be unlocked for both rental and owner-occupied housing. For example, 85% of renters in the [...]

  15. [...] There are also demographic consequences that result from a weakened housing sector. For example, NAHB estimates that more than 2 million household formations have been delayed due to challenging economic [...]

  16. [...] There are also demographic consequences that result from a weakened housing sector. For example, NAHB estimates that more than 2 million household formations have been delayed due to challenging economic [...]

  17. [...] homebuyers. This economic consequence, along with job market uncertainty, is the reason for pent-up housing demand. And policy proposals that would place homeownership further out-of-reach of today’s emerging [...]

  18. [...] There are also demographic consequences that result from a weakened housing sector. For example, NAHB estimates that more than 2 million household formations have been delayed due to challenging economic [...]

  19. [...] data, NAHB survey results, and significant amounts of pent-up housing demand that will emerge as rental demand first, suggest that construction of multifamily units will [...]

  20. [...] One of the most important stories of 2011 (and 2012) is the growning phenomenom of pent-up housing demand. [...]

  21. [...] has estimated that as a result of current economic conditions, there are approximately 2.1 million households that were expected to form in the last few years but did not. These “potential” households typically represent people doubling and tripling up on [...]

  22. [...] has estimated that as a result of current economic conditions, there are approximately 2.1 million households that were expected to form in the last few years but did not. These “potential” households typically represent people doubling and tripling up on roommates [...]

  23. [...] Great Recession, the rate of job openings has had an upward trend and is a cause for optimism about household formations and housing demand in the medium [...]

  24. [...] household delevaraging to continue into 2013, and as that process comes to its conclusion, unlocked pent-up housing demand will help support the emerging recovery in [...]

  25. [...] sharing has slowed the growth of total household formations, thereby leading to pent-up housing demand under the theory that many forms of household sharing are untenable over the long-run. As economic [...]

  26. [...] has previously estimated that pent-up housing demand totals about 2.1 million potential households. The Census Bureau calculated a similar number, reaching 1.9 million households who are “doubled [...]

  27. [...] has previously estimated that pent-up housing demand totals about 2.1 million potential households. The Census Bureau calculated a similar number, reaching 1.9 million households who are “doubled [...]

  28. [...] not occur at the end of the Great Recession due to historic price declines, excess inventories and pent-up housing demand associated with a weak labor [...]

  29. [...] A recent Census report highlights a component of pent-up housing demand – the rise of multigenerational households. [...]

  30. [...] A recent Census report highlights a component of pent-up housing demand – the rise of multigenerational households. [...]

  31. [...] recent Census report highlights a component of pent-up housing demand — the rise of multigenerational [...]

  32. [...] A recent Census report highlights a component of pent-up housing demand – the rise of multigenerational households. [...]

  33. [...] trend has translated into a lot of potential in household formation—as many as two million future households according to some estimates, with most of them expected to become renters as economic and labor [...]

  34. [...] trend has translated into a lot of potential in household formation—as many as two million future households according to some estimates, with most of them expected to become renters as economic and labor [...]

  35. [...] trend has translated into a lot of potential in household formation—as many as two million future households according to some estimates, with most of them expected to become renters as economic and labor [...]

  36. [...] trend has translated into a lot of potential in household formation—as many as two million future households according to some estimates, with most of them expected to become rentersas economic and labor [...]

  37. [...] trend has translated into a lot of potential in household formation—as many as two million future households according to some estimates, with most of them expected to become renters as economic and labor [...]

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