Natural Population Growth

The current home sales activity is matching levels seen 12 years ago, yet the total population has increased by more than 30 million since then.  The rise in population does not always mean a proportional rise in housing demand if people double and triple-up.  That is, there is no housing demand if additional roommates are acquired and young adults move back in with their parents.  Still, a clear-cut mismatch is arising between home sales and population, and this mismatch cannot continue indefinitely.  There is a limit to the number of roommates it is possible to have, and parents and kids will get on each other’s nerves at some point.  Thus the mismatch can be viewed as a source of future housing demand.

One interesting aspect of the population increase is slower natural population growth.  (Immigration numbers are not considered here.) Considering only U.S. domestic live births and domestic deaths, recent data points to one of the lowest paces of population growth on record.  Only 130,000 people per month are being added to the country.  A more normal pace would be something closer to 150,000.  This slowdown also means a slower pace of future move-up buyers arising from changing family circumstances.

The Great Recession has been painful in many respects.  Population growth has also been hit.  Still, this only means that the big mismatch between home sales and population continues to widen further but at a slower rate.  The pent-up housing demand continues to build.


Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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