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Monday, February 13, 2023

Demographics for Housing are not as Favorable as Projected 3 Years Ago

by Calculated Risk on 2/13/2023 01:15:00 PM

Almost a decade ago, I was positive on household formation and new home sales in the 2020s due to demographics.

In 2019 I wrote: I've also been positive on demographics too, but unfortunately with less immigration and more prime age deaths, the demographic outlook isn't as favorable as a few years ago (See Lawler:Lawler: Updated “Demographic” Outlook Using Recent Population Estimates by Age)
Census 2017 materially over-predicted births, materially under-predicted deaths (mainly for non-elderly adults), and somewhat over-predicted net international migration (NIM) for each of the last several years.
Then 3 years ago I linked to some population projections from the Census Bureau: A Changing Nation: Population Projections Under Alternative Immigration Scenarios. These projections were not as positive as the earlier projections that I used in the early 2010s.

In 2020, the Census Bureau had four immigration alternatives: main, low, high - and no immigration.

Using recently released data for 2022 - see Net Immigration and Household Formation - we can compare the various 2020 projections for 2022 with 2022 actuals.

Population and Projections (four immigration scenarios):
2022 Actual: 333,287,557

2020 Census Main: 337,342,000

2020 Census Low: 334,289,000

2020 Census High: 341,921,000

2020 Census None: 328,183,000

So, the actual was less than the low immigration projections from 3 years ago, although immigration was somewhat above housing economist Tom Lawler's projections last year.  It is important to continually adjust our outlook based on updated data!