Single-family home prices are poised to remain strong due to one simple economic reality: household formations are significantly outpacing the completion of new homes.
1. Household Formations are Driving Demand
Household formations have surged to 1.915 million as of September 2024, as shown in the chart below. This data reflects more individuals and families entering the housing market, whether by leaving rentals, moving out from family homes, or starting fresh due to life changes.
With a growing number of households looking for housing, the demand side of the market is intensifying. This persistent trend indicates that more buyers are competing for available inventory—a critical factor in price appreciation.
2. Home Completions Can’t Keep Up with Demand
The U.S. is completing only 1.60 million homes annually, per November 2024 data, while construction starts and permits are lagging even further. This limited supply is falling short of the nearly 2 million households formed annually.
This imbalance creates a classic supply-demand dynamic: more buyers competing for fewer homes, keeping pressure on prices to rise.
3. Historical Trends Suggest Steady Price Growth
Historically, home appreciation averages around 4.6% annually, but current conditions suggest prices could remain above this mark in the near term. When demand continues to outstrip supply, appreciation trends tend to accelerate. For prospective buyers, waiting to purchase could mean higher prices later.
Take advantage of today’s opportunities before rising demand pushes prices even higher. If you are weighing the decision to buy now or wait, reach out to request a personalized Cost of Waiting report tailored to your situation.
As the year draws to a close, I’ll be hanging up my writing hat and dusting off my Santa hat to spend quality time with family. Whether it’s decking the halls or counting down to midnight with a glass of bubbly, I’m embracing the holiday cheer and taking the next couple of weeks off. I’ll be back in the new year, recharged and ready to help you navigate the housing market.
Wishing you a Merry Christmas, a Happy New Year, and a home full of joy (or maybe just a new home)! See you in 2025!
