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More happy news for the housing market. The rate of household formation is back to its old self:

Household growth averaged about 500,000 per year from 2008 through 2010 – less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.

But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year. [Emph. added]

Meanwhile, the Cleveland Fed estimates that the pent-up demand from the low-formation years in 2008 through 2010 comes to 2.6 additional households. Those people aren’t going to live with their parents forever. . . . .