The United States housing market was red hot in 2021, with property sales on track to reach their best level in 15 years. According to the Federal Housing Finance Agency, average property prices increased some 20% in the third quarter, versus to the same period last year. And an increase in household formation caused housing demand to grow faster than supply, driving prices higher.
The work-from-home trend boosted the demand by millennials for single-family homes, expediting their transition from renting to owning houses. In addition, housing formation was impacted significantly in 2020 with the emergence of COVID-19, with young adults deferring their plans to move out of their parent’s homes. So 2021, a year of recovery, saw a significant jump in household formation. Roommates moving out with an increase in their incomes in an improving job market is another reason behind the increase in the household formation rate. This trend is expected to continue.
