Vermont's population has held roughly steady for several years, with modest dips in some recent counts. Among residents and policymakers, that has prompted a fair question: if the state is not gaining people, why does it need more homes?

The intuition behind the question is reasonable. Population sounds like a count of who needs a place to live, and a steady count should imply a steady need. But population counts and housing demand do not necessarily track together, and the gap between them now can explain a significant driver of Vermont's current housing shortage on its own. The number of people who live in Vermont and the number of homes Vermont needs are answers to two different questions.

Households, Not Population

The figure that actually drives housing demand is not population but household size, and that figure has been falling steadily for decades. As was recently covered in an article on the same topic by the Vermont Housing Finance Agency, the average Vermont household contained 2.6 people in 1990. By 2015, it had dropped to 2.4, and today it sits at roughly 2.2.

To understand what this means in practice, consider a town of 1,000 residents. In 1990, at 2.6 people per household, the town required about 385 homes to house everyone. The same 1,000 residents today, at 2.2 people per household, require roughly 455—an increase of 70 units, or about 18 percent, with no change in population. As was pointed out in VHFA’s article, if you extrapolate this to a state-wide view, Vermont needed 22,000 new homes to be built between 2015 and 2024 just to accommodate the impacts of shrinking household size of the existing population.

This pattern is not specific to Vermont, but part of a long-standing national trend. Americans across most demographic groups have been forming smaller households for decades: marrying later, having fewer children, divorcing more often, and living alone for longer stretches of life. Vermont sits further along this curve than most states because its population skews older, and the state's average household size already runs below the national average—a difference that makes the gap between population count and actual housing demand wider here than in nearly any other state. (By most counts, only Maine and DC have smaller average household sizes than Vermont.)

Household composition has shifted as much as size. In Vermont today, only 17 percent of households consist of parents living with children, the household type that has historically anchored housing policy and public imagination. The remaining 83 percent are people living alone, couples without children at home, single parents, retired pairs, and adults sharing housing with roommates or aging relatives. By 2022, roughly 70 percent of Vermont households—about 187,000 in total—contained only one or two people.

These shifts also show no sign of slowing. Between 2025 and 2029, an estimated 67 percent of projected newly formed households in Vermont, or roughly 8,000 of an expected 12,000 new households, will consist of only one or two people. Even with no net population growth, Vermont would continue to form new households faster than its existing housing stock can absorb them.

What We Have, What We Need

The total size of Vermont's housing stock is only part of the picture; the composition of that stock matters just as much. Vermont's housing inventory was built largely for an earlier era of household composition—a state with more nuclear families and fewer older residents living independently—and the population today looks meaningfully different. Households now span a wide range of sizes, ages, and arrangements, and the existing stock does not reflect that range well.

Roughly 75 percent of owner-occupied homes have three or more bedrooms, yet 68 percent of those same owner-occupied households consist of just one or two people. Expanding our view to the entire market, the state has roughly 187,000 one- and two-person households but only about 138,000 homes with one or two bedrooms. Even if these homes were perfectly distributed across the state according to demand, this would still leave a gap of nearly 50,000 small households who, in a healthier market, might reasonably expect to find homes that fit them. Instead, Vermont's largest homes end up housing many of its smallest households, often not by preference but for lack of alternatives.

The financial consequences of that mismatch fall hardest on households that, on paper, look like the lucky ones. Thousands of Vermonters, particularly older homeowners on fixed incomes, are paying property taxes, mortgage interest, heating bills, and maintenance costs on more space than they need. A four-bedroom house designed for a family of five takes roughly the same fuel to heat whether two people live there or six, and as budgets tighten, maintenance gets deferred. Roofs, furnaces, septic systems, and weatherization projects get pushed off one year, then another. The result is a housing stock that ages faster than it should, occupied by residents stretched financially by square footage they would gladly trade for something smaller.

Construction patterns have not closed the gap. Between 2021 and 2025, more than half of the new homes built in Vermont were single-family houses, even as two-thirds of projected new households will form as one- or two-person households. In other words, the majority share of new homes we’re building are too big for the households that need them.

This mismatch is structural rather than accidental, because what gets built reflects what local rules permit, where, and at what density. In many Vermont towns, regulatory frameworks make a single, large house on a sizable lot the easiest project to permit and the most reliable to finance, while smaller and denser housing types—duplexes, triplexes, townhouses, small condominium buildings, cottage clusters, accessory dwelling units, and modest apartment buildings near town centers—run up against minimum lot sizes, parking requirements, height limits, frontage rules, zoning categories, and other discretionary review criteria that often date to a different era of housing demand. The kinds of homes Vermonters increasingly need are, in many places, the kinds Vermont towns have made hardest to build.

When the homes that the system facilitates are mostly large and expensive, the buyers who can afford them become the natural market. Seasonal residents, retirees from out of state, and higher-income remote workers fill the new units, while Vermonters looking for smaller, less expensive options cannot find what they need. None of this reflects a failure of those buyers; it reflects a market behaving rationally given the options put in front of it.

Bottlenecks on the Housing Ladder

A functional housing market depends on slack. People move out of their parents' homes, pair up, have children, watch those children leave, and eventually downsize, and each of those transitions opens a home for the next household to step into—a single new building project, in a healthy market, can free up a chain of existing homes for new occupants. The chain depends on the existence of homes at every stage of life, in roughly the quantities those stages require.

Quantity alone, though, is not enough. We’ve already covered why Vermont has too few homes for the households it already contains, and especially too few small ones. But, there is a second problem layered on top of the first, in which even the homes that do exist are often occupied by households they no longer fit. Both pressures are real, and both have to ease for the market to function.

Consider a Vermonter in her late seventies living alone in the four-bedroom house where she raised her family. The home has grown too large, the stairs harder, and the heating bills are climbing. She is still independent and has friends and family nearby, so she would prefer a smaller place closer to downtown—a condominium, a unit in a small apartment building, a cottage in a senior community within walking distance of her doctor and the grocery store. In her town, none of those options exist at a price she can afford, so she stays.

A few miles away, a young family looking for their first home would be a natural buyer for that four-bedroom house, but because she cannot move, they cannot buy. They keep renting an apartment that has become tight as their family has grown, or they stretch their budget for a new construction home that is larger and more expensive than what they actually need. Across town, a 24-year-old who grew up in the area is still living with his parents, watching starter homes and small rentals drift further out of reach. Eventually he takes a job in a state where he can afford to start his own household, and the local school loses a future parent, the local hospital loses a future patient, and the local economy loses a worker.

Each household in that chain is making a reasonable decision given the options in front of them; it’s the options themselves that are the constraint. A modest number of smaller, well-located homes—a small condominium building near downtown, a duplex on a quiet residential street, a cluster of townhouses near a school, an apartment building near a major employer—would let the senior sell her house to the young family at a price closer to its existing value rather than the new-construction premium. The young family would in turn vacate an apartment that becomes available to the 24-year-old, or to another household at a similar life stage.

It would be a mistake, though, to read this as an argument that a handful of well-placed senior homes would resolve Vermont's housing shortage on their own. Unblocking the chain helps existing homes find better-matched occupants, but it does not change the underlying arithmetic from earlier: Vermont's households keep getting smaller and more numerous, and the state needs meaningfully more homes overall to keep up, not just better-distributed ones. Filtering and quantity are complementary problems; progress on one without the other leaves most of the shortage in place.

Location matters as much as size in making any of this work. A small home built far from jobs, schools, and services solves one part of the problem and creates another, in the form of longer commutes, higher transportation costs, and isolation for residents who cannot or do not drive. Smaller homes located near employment centers, transit corridors, and downtown services reach the people who most need them, and they offer existing homeowners a realistic option to downsize without leaving the communities where they have spent most of their lives. Type, size, location, and sheer quantity are all part of the same answer, and Vermont needs progress on each.

What the Numbers Actually Argue

The question that opened this piece—why Vermont needs more homes when its population is not growing—has a clear answer once the underlying numbers are visible. Population was never the constraint that mattered most. Households are smaller than they used to be, they keep getting smaller, and the homes Vermont built for an earlier era no longer fit the people who live here now. Housing demand has been quietly outrunning the population figure for decades.

Furthermore, this answer illustrates an important nuance of what Let’s Build Homes has always said about Vermont’s housing shortage: there are not enough homes that meet Vermonters’ needs and budgets. As our households shift in composition, our housing stock needs to evolve with them. Not many Vermonters can afford to heat, maintain, and pay taxes on twice as much house as they need, and so we need more right-sized homes in the places that people want them.

And there's a further wrinkle: the recent population dip itself is partly downstream of the housing shortage. When households shrink faster than the housing stock grows, the people squeezed out don't vanish from the math—they crowd into homes that don't fit them, end up unhoused, or leave the state to start a household somewhere they can afford one. Some portion of what registers as a flat or declining population is itself a symptom of the shortage, not a counterargument to it.

Now, this has all been the case for building more, even when population growth is flat. However, the case for building when the population is growing is the same case, only more pressing. Schools need students, hospitals need staff and patients, employers need workers, and some portion of Vermont's recent population dip reflects residents who would have stayed if they could have found a home that fit their life and budget. A growing population is something Vermont should want, and a state that wants it has to be a state where people can actually live.

Either way, the conclusion holds. Population growth does not decide whether Vermont needs to build—it decides whether the state needs to build more, or build far more. The honest question is not whether to build more homes, but whether the homes we build over the coming decade will fit the lives Vermonters are already leading, and the lives of the Vermonters the state hopes to keep. Right now, they largely do not. Closing that gap is the work in front of us.