Household formation is an important long-term indicator of housing demand for both rental and for-sale housing. But household formation is also affected by affordability, because people make different choices based on what they can afford. There was strong demand for all types of housing in late 2020 and 2021. Many millennials were entering their prime first-time home-buying years, and a strong job market and remote work enabled people to seek more space. But in 2022, rising mortgage-interest rates and high rents have weighed on demand. More people are doubling up with roommates, and home prices and rents are now falling in some markets.

-Nicole

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