New households among people of a certain age grow for at least two fundamental reasons: more folks in the age group and flush economic times for the group. According to research by the Harvard-MIT Joint Center for Housing Studies, Millennials (aged 26 to 43 in 2020) drove up their own household formation rate and by extension the national rate during the last decade. Household growth for persons aged 25 to 34 increased from 34,000 (2010-2013) to 170,000 (2013-2016) to 250,000 (2016-2019). Although there are reasons to believe household formations may have slowed during 2020 due to the pandemic, the strong countervailing force of Millennials aging through their primary household formation years represents a positive for consumer markets. Even as total population growth slows down, household growth may hold its own thanks to Millennials. Smaller average household sizes among new Millennial households (singles, smaller families, postponed childbearing, etc.) and aging Baby Boomers (long-gone kids, and sadly, lost spouses due to mortality and divorce) permit demographers to reconcile slower population growth with higher rates of household formation. Who knew?
Source: Harvard-MIT Joint Center for Housing Studies, The State of the Nation’s Housing: 2020.
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