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Formaldehyde is an important chemical used widely by industry to manufacture building materials and numerous household products. It is also a by-product of combustion and certain other natural processes. Thus, it may be present in substantial concentrations both indoors and outdoors.

Sources of formaldehyde in the home include building materials, smoking, household products, and the use of un-vented, fuel-burning appliances, like gas stoves or kerosene space heaters. Formaldehyde, by itself or in combination with other chemicals, serves a number of purposes in manufactured products. For example, it is used to add permanent-press qualities to clothing and draperies, as a component of glues and adhesives, and as a preservative in some paints and coating products.

In homes, the most significant sources of formaldehyde are likely to be pressed wood products made using adhesives that contain urea-formaldehyde (UF) resins. Pressed wood products made for indoor use include: particleboard (used as sub-flooring and shelving and in cabinetry and furniture); hardwood plywood paneling (used for decorative wall covering and used in cabinets and furniture); and medium density fiberboard (used for drawer fronts, cabinets, and furniture tops). Medium density fiberboard contains a higher resin-to-wood ratio than any other UF pressed wood product and is generally recognized as being the highest formaldehyde-emitting pressed wood product.

Other pressed wood products, such as softwood plywood and flake or oriented strandboard, are produced for exterior construction use and contain the dark, or red/black-colored phenol-formaldehyde (PF) resin. Although formaldehyde is present in both types of resins, pressed woods that contain PF resin generally emit formaldehyde at considerably lower rates than those containing UF resin.

Since 1985, the Department of Housing and Urban Development (HUD) has permitted only the use of plywood and particleboard that conform to specified formaldehyde emission limits in the construction of prefabricated and mobile homes. In the past, some of these homes had elevated levels of formaldehyde because of the large amount of high-emitting pressed wood products used in their construction and because of their relatively small interior space. The rate at which products like pressed wood or textiles release formaldehyde can change. Formaldehyde emissions will generally decrease as products age. When the products are new, high indoor temperatures or humidity can cause increased release of formaldehyde from these products.

During the 1970s, many homeowners had urea-formaldehyde foam insulation (UFFI) installed in the wall cavities of their homes as an energy conservation measure. However, many of these homes were found to have relatively high indoor concentrations of formaldehyde soon after the UFFI installation. Few homes are now being insulated with this product. Studies show that formaldehyde emissions from UFFI decline with time; therefore, homes in which UFFI was installed many years ago are unlikely to have high levels of formaldehyde now.

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