Slow birth rate portends slower-than-expected housing recovery

A slowing birth rate could prove to be one of the biggest drags on the housing recovery in the United States, according to BusinessWeek. Just 4 million new babies were estimated to have been born in the United States last year, the lowest total since 1999, largely because of the difficult economy.

A decline in births can usually be attributed to families putting off having another child — not forgoing the idea altogether — and ultimately, leads them to put off a decision to buy. Without new children, families who already own homes are less likely to look to trade up. Housing comprises most of the $227,000 middle-income families spend on the average child over 17 years, according to BusinessWeek. That correlation can best be seen in Arizona, Florida, Georgia and Nevada where birth rate drops have been especially prevalent and housing prices have fallen even further than the national average.

While a slow birth rate is not unusual during recessions, the current low rate continues to hover below last year’s forecasts, and could foreshadow an even slower housing recovery than expected, BusinessWeek said. [BusinessWeek]