As job growth remains steady, conditions are ripening for household formations to grow stronger, according to a recent report from Sterne Agee, a privately owned investment bank, on housing demand.
Children are moving out of their parents' homes, and college graduates are stepping out on their own, helping to fuel demand for housing.
Jay McCanless, a Sterne Agee analyst, expects housing starts to remain strong through at least 2015.
The growth in household formation has caused an increase in demand over the past two years for all types of housing, including multifamily and single-family ownership and rentals, according to the report.
Household formation hit bottom in 2009 and 2010, hovering in the mid-to-high 300,000 range. The normal average is about 1.2 million. In 2011, annual household growth rose to 1.1 million, and 2.4 million in 2012.