US Real Estate Sector NAICS 531

Aug 19, 2025 - Renters Drive Household Formations

• Renters were the sole driver of the rise in household formations in the second quarter of 2025, according to the Census Bureau’s most recent Housing Vacancy Survey (HVS) and the National Association of Home Builders (NAHB). In Q2 2025, the total number of US households increased to 132.5 million, up by 1.2 million compared to 131.3 million in the second quarter of 2024. The increase in new households was entirely driven by renters, amid the lowest homeownership rate since 2019. US homeownership fell to 65% of total households in Q2 2025 and was 4.2 percentage points below the 25-year average of 66.3%. High home prices, elevated mortgage rates, and low inventories have pushed housing affordability to the lowest level in decades.
• So far in 2025, small investors are playing an outsized role in the U.S. single-family housing market, according to The Wall Street Journal. In the first half of 2025, small investors accounted for about 25% of home purchases, outpacing large institutional buyers, according to property analytics firm Cotality. While traditional home buyers remain sidelined by high home prices and interest rates, small investors are capitalizing on seller incentives. Unlike large firms constrained by institutional reporting, smaller investors can take greater risks and are increasingly targeting mid-priced homes to renovate and rent. An uptick in the percentage of homes sold to small investors could boost demand for residential remodeling as investors buy and fix up homes for flipping or renting.

• About two-thirds of office users plan to increase their square footage over the next three years, according to CBRE’s 2025 Americas Office Occupier Sentiment Survey. One-third of firms surveyed said they plan to reduce their office footprints over the next three years. However, company size tends to dictate the likelihood of expanding or contracting office use. In 2025, 95% of smaller firms said they planned to increase their office usage, compared to just 85% in 2024. About 60% of companies with 10,000 employees or more said they plan to reduce square footage over the next three years. Industry insiders suggest that firms seeking to reduce expenses are doing so by rightsizing their office occupancy, not by downgrading to lower-quality space.
• The Trump administration’s proposed $27 billion cut to federal rental assistance programs—amounting to a 43% reduction—has triggered concern across the affordable housing sector, stalling projects and shaking lender confidence, according to The Wall Street Journal. Some developers have halted construction due to postponed Section 8 subsidies, while lenders cite uncertainty over HUD funding as a significant deterrent. Although the House Appropriations Committee rejected the overhaul, HUD continues lobbying for the cuts, which would slash its budget by 44%. Critics warn that the move could destabilize the housing system, jeopardizing billions in multifamily loans and undermining gains from recent tax law changes that expanded the Low-Income Housing Tax Credit. Despite these incentives, developers argue that new affordable units may lack the operating revenue to remain viable without voucher programs.