Economy
New-Home Permit Demand Could Drop as Much as 86% by 2035, One Analyst Projects
By Bear Creek Staff, . Bear Creek Capital Network.
HousingWire published a detailed demand analysis from Scott Cox this week, modeling four independent methods to bracket single-family permit activity from 2025 through 2035. Every approach lands in the same territory: a market that could be anywhere from a quarter to a tenth of its current size.
What the numbers show
The current baseline is roughly 880,000 single-family permits a year, a pace Cox notes matches the 40-year average from 1980 to 2019. His four methods produce a range of 123,000 to 670,000 permits annually, implying a decline of 24% to 86% from that level.
The first method ties permit volume to net new household formation, using projections from the Harvard Joint Center for Housing Studies. Against the Joint Center's main scenario of 8.6 million net new households over the decade, the historical ratio of permits to households implies roughly 670,000 single-family permits a year. Against the Joint Center's low-immigration alternative of 6.9 million households, the same ratio implies roughly 538,000.
The second method bypasses household projections entirely, instead tracking permits against growth in the core home-buying population, defined as ages 25 to 74. Applied to Census Bureau population projections, the main scenario implies roughly 274,000 permits a year; the low-immigration scenario implies roughly 123,000.
Why the gap between methods matters
The roughly 400,000-unit spread between the household-formation result and the population result is not noise. It comes down to a single assumption: whether headship rates, meaning the share of people in an age group who form their own household rather than double up with family or roommates, will keep rising as they have for decades. The household-formation approach inherits whatever the Joint Center assumes about that trend continuing. The population approach makes no such assumption.
Cox adds two gut-check methods. One assumes deaths exceed births by 200,000 a year, immigration returns to a long-term average of about 1 million annually, and households average two people, producing roughly 400,000 units of total demand before any single-family adjustment. The other uses prime working-age population growth, ages 25 to 65, as a ceiling on job creation, then applies an industry rule of thumb of about two jobs per single-family permit. That method implies roughly 240,000 permits a year under the main Census scenario and roughly 86,000 under the low-immigration case, the lowest figure in the entire analysis.
The demographic forces behind it
Cox's argument, which he and Steve Friedman presented at the HousingWire Homebuilder Summit, rests on three converging pressures. No major metro is at replacement-level fertility. Immigration, which drove most US population growth for two decades, is now close to zero. And deaths are projected to exceed births by 2030. Critically, roughly 85% of remaining household growth over the next decade sits in the 75-and-over cohort, a group that buys almost no new detached homes.
Cox acknowledges the methodology is deliberately rough. Household size could shrink further, generating more households but also reducing buying power. Immigration could exceed 1 million a year. Multigenerational living trends could reverse. The article, as published, does not resolve these uncertainties, and Cox frames the range as the honest answer rather than a forecast.
What to watch
For builders, lenders and land investors, the practical question is which end of this range their current underwriting implicitly assumes. A business plan calibrated to 600,000 permits looks very different from one built around 200,000, and the demographic inputs driving the difference, immigration policy and headship-rate trends, are both live and contested. Cox's framework at least makes the bet explicit, which is more than most long-range housing analysis currently offers.
Source: https://www.housingwire.com/articles/single-family-permits-demand-range/
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