January 31 - The local housing market might be pretty quiet right now, but we are seeing dramatic action in the numbers just released by the Census Bureau. Household formation shot through the roof during the fourth quarter. THIS IS BIG NEWS, despite there being little reporting of it in the media at large.
The annual household formation numbers for the fourth quarter were as follows:
- October 2014 = 1,435,000
- November 2014 = 1,618,000
- December 2014 = 2,001,000
These are colossal numbers, especially compared with 12 months ago:
- October 2013 = -110,000
- November 2013 = 103,000
- December 2013 = -205,000
The December number of just over 2 million is the highest we have seen since June 2005, almost 10 years ago and at the height of the housing bubble.
At the moment this household formation rate is translating into demand for rentals, but in every up cycle this is the first stage and it is usually followed by an upturn in demand for homes to buy. Household formation is usually a leading indicator of both upturns and downturns in the housing market, especially when examined as a 12-month rolling average.
The current chasrt looks like this:
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