The Baby Boomers Are Driving Growth

Baby boomers are the “driving force” of household formation, which is critical for real estate demand, according to a new blog post at the National Association of REALTORS® Economists’ Outlook blog.

The highest gains in household formation have been by 65- to 74-year-olds, who accounted for 860,000 new households alone from the first half of 2014 to first half of 2015, according to Census Bureau data. The 55 to 64 age group comprised the second highest at 391,000, followed by people over 75 years of age who formed 264,000 new households during that time period.

Meanwhile, younger age groups had less. The 20 to 24 age group had negative net household formation numbers of 85,000. The 25- to 34-year-old age group, however, had 159,000 new households during that time.

Young professionals have been slow to form their own households. The share of the population living with parents has risen dramatically over the last few years. For the 25- to 29-year-old age group, the percentage has risen from 10 percent in 1980 to 25 percent by 2013. Also, the share of 25-to 29-year-olds who have never been married has dropped from 70 percent in 1980 to less than 40 percent in 2013.

Source: “Baby Boomers Lead Recent Household Formation,” National Association of REALTORS® Economists’ Outlook blog (Sept. 25, 2015)

New-Home Sales Surge Nearly 19%

After a sluggish start to 2014, new-home sales posted a strong rebound in May. Sales of newly built single-family homes soared to the highest rate since May 2008, jumping 18.6 percent last month, according to data released Tuesday by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“This increase is a welcome sign after a slow start to 2014,” says David Crowe, chief economist of the National Association of Home Builders. “As job creation continues, we can expect further release of pent-up demand and continued gradual growth in the housing recovery.”

Across the country, regions posted big gains in new-home sales, with the Northeast leading the pack. Sales of new-homes jumped 54.5 percent in the Northeast, 34 percent in the West, 14.2 percent in the South, and 1.4 percent in the Midwest.

Inventory levels mostly stayed flat, as builders continue to be cautious about overbuilding. The inventory of new homes for sale held steady at 189,000 units in May, representing a 4.5-month supply at the current sales pace.

Source: National Association of Home Builders