Housing market reshapes CRE rentals

At the end of 2025, 46.2 million households identified that they live in rental housing, or 34.3% of all households.¹⁶ Using the recent pace of household formation of approximately 859,000 new households per year, we estimate there will be 143.4 million households by 2035. This total household count forecast was then used as the final 2035 estimate across scenarios one and two.

Our scenario details and forecast assumptions are as follows.

Baseline: The Deloitte US economic forecast and straight-line assumption

In the base case, we assume that today’s homeownership rate of 65.7% will not change by 2035. We leverage Deloitte’s latest US economic forecast for homeownership growth, but the distribution of new renters is no larger or smaller than what it is today.

Scenario one: Pressures persist, but the system works

In this scenario, we base estimates on the forecasted rate of 64.3% homeownership by the Joint Center for Housing Studies at Harvard University.¹⁷ Using our final household forecast, that would mean roughly 51.2 million households would be renters by 2035, a 5 million increase from today’s total or a 10.6% increase.

Deloitte assumptions applied to reach this total:

• Of the new households formed over time, 60% become renters.
• Owner-to-renter conversions are negligible, as we assume current owners would choose to remain owners rather than give up equity, retain their lower-than-market mortgage payments, or potentially aim to pass their properties on to their families.
• In this scenario, prices and rates remain elevated, down payment hurdles are still in place, but there is no major foreclosure wave or credit crisis.

Scenario two: Tough affordability, tight credit, and owner conversions

For the second scenario, the forecasted homeownership rate settles at 60.8% by 2035 as estimated by the Urban Institute.¹⁸ By 2035, this would equate to 56.3 million households, a 10 million or 21.7% increase from 2025.

Deloitte assumptions applied to reach this total:

• Nearly 90% of the new households formed over this period become renters.
• There is an incremental conversion of owners to renters, forced by life circumstances to rent, including downsizing trends, divorce, and retirees shifting to rentals.
• Rates and home prices also stay higher for longer, enough so that first-time home buying remains muted.
• There is an increase in government incentives for developers to build in the interest of renters, more often with products like build-to-rent or LaaS.