As the job market recovers, young adults are moving out on their own and creating new households, which has driven the household formation rate to its fastest pace since 2007. Economists and industry experts are predicting the trend will lead to between 750,000 and 1 million new households created this year. In the year ending March 2010, only 357,000 were formed. The increase in demand is expected to help dampen the negative effects of the shadow inventory and boost housing starts by more than 50 percent in the next year. Brad Hunter, chief economist and national director of consulting for research firm Metrostudy, said household-formation rates are already tipping back upward and pent-up demand for housing is strong. According to a report from Harvard University’s Joint Center for Housing Studies, as many as 13.8 million new households will likely be formed by 2020. More here.
