Adobe Stock/Amy Walters

New projections from the Harvard University’s Joint Center for Housing Studies (JCHS) indicate household growth in the coming years will be significantly slower than the recent past. Among the knock-on impacts of lower household growth will be a notable impact on housing demand.

The JCHS forecasts an increase in households of 8.6 million between 2025 and 2035, or 860,000 per year. In comparison, 10.1 million households were added during a “sluggish” period of growth in the wake of the Great Recession in the 2010s.

The JCHS projects growth will slow even further between 2035 to 2045 with only 5.1 million new households. Such growth would be the lowest in any decade during the last 100 years. Levels could be even lower than projected depending on immigration levels, according to the JCHS. The current projections assume immigration levels similar to those of the past three decades.

With household growth as the single biggest source of demand for new housing, a slowdown in household formation over the next two decades will have a significant impact on the new construction market. The projected slowdown will reduce demand for new unit construction from the current rate of 1.4 million units per year to an average of 1.1 million units per year between 2025 and 2035 and to 800,000 units per year in 2035 and 2045, according to JCHS.

In a scenario with lower immigration, the JCHS projects demand would support the construction of just 950,000 new units per year between 2025 and 2035 and just 610,000 units per year between 2035 and 2045.

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