This is the beginning of a series investigating housing supply and demand.
To start, let’s take a top-down view on the relationship between the change in population and the amount of new housing completed each year.
The population data source is the World Bank: “Total population is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship–except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin. The values shown are mid year estimates.”
The housing completions data source is U.S. Census Bureau and is total private housing, including single- and multi-family.
| Period | Population Change / Housing Completions (avg) |
| 1970 – 2022 | 1.92 |
| 2000- 2022 | 2.11 |
| 2021-2022 | 1.98 |
| 2019-2022 | 1.27 |
This ratio essentially shows how many people were added to the population for each new housing unit completed. You might even think about it as how many new people need to share each new house. As the graph and table above show, each unit needs to be shared by fewer people. So it is pretty clear that claims about a housing shortage are not based on the population growing at a faster pace than housing units are being built.
The housing shortage view is mainstream and supported by many analysts and professionals who have studied the national housing market in great detail. I pulled this off of Twitter:
What could be the drivers of a housing shortage given the broad trend of the stock of new housing units growing faster than the population? Next time we will take a closer look at the demographics within the broad population, to see if changes in the working age population can explain demand. Or perhaps there has been a structural demand shift toward a higher household formation rate. Along the way, we should also form a view on the total housing stock, and the composition of that stock between single- and multi-family. More to come…