A source told Closer magazine: "Niall told his family he's crazy about Demi.
"He's already going to have to send at least six months a year in the States with One Direction, so he wants to base himself near her and make a proper go of it."
Demi recently admitted she thinks Niall is "awesome".
When asked if she is dating the singer, Demi joked: "I don't even know who One Direction is."
However, she quickly added: "I'm kidding. Niall is a friend of mine. I do know who he is. We're just friends and he's awesome. He's cool."
Niall recently revealed he "doesn't know" what's going to happen between him and Demi.
He admitted he has been in contact with the US 'X Factor' judge and while they get on very well and really like each other, he isn't sure what the future holds.
He said: "We've spoken alright, yeah. So, I got in contact with her, she's really nice. Um, I don't know what's going to happen."