New research reveals that rising U.S. housing costs may be responsible for an 11% drop in children being born between 1990 and 2020, compared to a scenario in which rents had remained constant at 1990 levels. 

This decline, which accounts for half the drop in fertility between the 2000s and 2010s, is not just about cost; it is about the type of housing available. In “Build, Baby, Build: How Housing Shapes Fertility,” University of Toronto PhD candidate Benjamin K. Couillard argues that, if we want more family formation in our cities, housing policies must specifically boost the supply of large, family-friendly housing; building small units has a much weaker effect on fertility.

Key Takeaways:

  • Rising housing costs since 1990 may be responsible for 11% fewer children born—a massive shift that accounts for 51% of the total drop in U.S. birth rates between the 2000s and 2010s
  • Big families face a steeper inflation rate than singles. Because parents have a stronger, non-negotiable need for extra bedrooms, rising rents act like a progressive tax on fertility, making the financial penalty for parenthood far higher than the penalty for remaining single.
  • Dollar for dollar, policies that reduce the cost of large family homes (3+ bedrooms) result in 2.3 times more births than policies that reduce the cost of small apartments (1 bedroom).

To measure the impact of rent on fertility, the researcher had to collect household demographic data and household sensitivity to price changes, plus develop a model based on this data to simulate changes.

  1. Because the Census Bureau hides specific lists of which renters are also parents to protect privacy, the author used a mathematical technique to reconstruct a statistically accurate roster of U.S. households. 
  2. To prove that neighborhood rent price causes the drop in babies (rather than families self-selecting to different neighborhoods), he used a “donut instrument.” By tracking rent spikes driven by disamenities like railway noise in surrounding towns, he isolated cases in which families faced higher costs without the neighborhood itself changing, proving that the price tag alone drove changes in life decisions.
  3. He fed these households and their price sensitivities into a structural model—a simulation calibrated to match 30 years of history. This allowed him to run scenarios to see what would happen if we increased the supply of three-bedroom apartments.

This modeling approach reveals three crucial findings about the housing-fertility link.

  • Housing costs impact birth rates: By holding fertility preferences constant and simulating a world where rents stayed at 1990 levels, the study found that 13 million (11%) more children would have been born by 2020. This suggests that the recent “baby bust” isn’t just people choosing childlessness; it is a rational economic reaction to the rising “shadow price” of space, accounting for 51% of the fertility drop between the 2000s and 2010s.
  • Families are more cost-sensitive: The study plots the “rent coefficient”—a precise measure of how much a rent hike impacts a household’s decisions—and reveals a stark disparity: a family of six is roughly twice as sensitive to price hikes as a single person. This occurs because families have a structurally “stronger taste” for larger units (3+ bedrooms) that singles do not share. While a single person can dodge rent inflation by downsizing to a studio, a growing family cannot easily cut bedroom counts, making them uniquely vulnerable to rising average rents.
  • Large units are 2.3x more effective: To test solutions, the researcher simulated spending equal subsidies on either small or large units. The small-unit plan failed to raise birth rates, primarily incentivizing singles to live alone. In contrast, subsidizing large units created 2.3 times as many babies. This policy worked by narrowing the price gap between 2-bedroom and 3-bedroom homes, effectively making the “upgrade” to a family-sized home affordable for couples who had been priced out of the extra room.

The research directly supports policies that prioritize “family-friendly housing”. To meaningfully raise birth rates, policymakers should focus on increasing the supply of large (3+ bedroom) units. This can be achieved by reforming regulations (fire egress, parking rules, etc.) that distort living space away from bedrooms and building out the “missing middle” rather than focusing only on small units or micro-units.

If housing is to be used as a lever for family policy, the focus must be on producing housing that families actually want.