The Census Bureau’s estimate of household formation as part of its Homeownership & Vacancy Survey was a very encouraging 1.7m in 2014. Admittedly, that’s significantly above the alternative Current Population Survey measure, which only rose by 0.8m last year. Measures of household formation are very noisy and the truth may lie somewhere in between. Nevertheless, the combination of a high share of young adults living in the parental home, falling mortgage rates and loosening credit means that the outlook for household formation is strengthening. That’s one of the reasons why we are optimistic about the prospects for homebuilding over the next few years.
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