U.S. housing demand has undergone a dramatic change in the aftermath of the housing bust that was a key trigger of the global financial crisis and the Great Recession that followed. Between 2004 and 2016, the nation’s rental demand expanded by almost 10 million households, while owner demand grew by less than 1 million. This was a striking contrast to the historical pattern, when owners accounted for more than 60 percent of overall household growth. The main driver behind this was a sharp drop in the nation’s homeownership rate from a record high of 69 percent in 2004 to a 50-year low of 63.4 percent in 2016.

One of the demographic headwinds to homeownership is a steady rise in the share of single-person households and an associated decline in average household size. Since 1940, the share of single-person households has increased from approximately 8 percent to 28 percent. This share is expected to continue edging higher, with the number of one-person households projected