Harvard's Joint Center for Housing Studies has projected that the number of households in the U.S. is expected to increase by 8.6 million, or approximately 860,000 per year between 2025 and 2035. This would be far less growth in the next 10 years than in recent decades, including the sluggish 10.1 million households added in the wake of the Great Recession in the 2010s. The pace of growth is expected to slow between 2035 and 2045 to a gain of just 5.1 million households, which would be less growth than in any decade of the last 100 years.
Key findings
Slowdown in household growth:
- Expected increase of 8.6 million households (approximately 860,000 per year) from 2025 to 2035.
- Anticipated further slowdown with only 5.1 million households (or about 510,000 per year) added between 2035 and 2045.
Comparative growth rates:
- Growth rates in the next decade will be lower than those observed after the Great Recession, where 10.1 million households were created from 2010 to 2020.
Demographic changes:
- Significant growth in households headed by individuals aged 80 and older, expected to rise by nearly 60% (approximately 6 million households) in the next 10 years.
- New households formed by younger generations will lead to increased racial and ethnic diversity.
Impact of immigration:
- Projections assume immigration levels remain stable at 870,000 per year from 2025 to 2035.
- A low-immigration scenario could reduce household growth to 6.9 million from 2025 to 2035.
Construction demand:
- Household growth is the principal driver of demand for new housing.
- New housing unit construction is projected to decline from 1.4 million units per year currently to 1.1 million units from 2025 to 2035, and to 800,000 units from 2035 to 2045.
Historical comparison:
- Construction demand levels (800,000 to 1.1 million units per year) will be significantly lower than the historical average of 1.6 to 2.1 million units per year from the 1970s to the 2000s.
Current housing shortage:
- There's an existing housing shortfall estimated between 1.5 million to 5.5 million units.
- Future construction may need to exceed projected demand to address this shortage.
Overall implications:
- The projections indicate a future with much slower household growth, primarily due to aging populations and the loss of existing households.
- There will still be new household formations, but they’ll not be sufficient to maintain current housing demand levels.
These trends underscore the need for policies and strategies to adapt to changing housing needs and demographic shifts in the coming years.
