According to the Census Bureau’s Housing Vacancy Survey (HVS), the nation’s homeownership rate in the third quarter of 2015 was 63.7%, the first increase since 2013. However, the homeownership rate was still down by 70 basis points on a nonseasonally adjusted basis from the third quarter of 2014 to the third quarter of 2015.
Compared to the peak at the end of 2004, the homeownership rate has steadily decreased by 5.5 percentage points and remains below the 25-year average rate of 66.3%.
Homeownership rates continue to decrease, but to a smaller degree, for all age groups on a year-over-year basis. The homeownership rate for household heads younger than 35 years old (35.8%) decreased by 20 basis points from the third quarter of last year. The largest decline, however, was for those aged 35-44 (58%), with an annual drop of 100 basis points.
The nonseasonally adjusted homeowner vacancy rate remained low but increased slightly in the third quarter 2015. The current homeowner vacancy rate was 1.9%, 10 basis points higher than last quarter and the third quarter of 2014.
The national rental vacancy rate also rose by 50 basis points to a 7.3% rate for the third quarter on a nonseasonally adjusted basis, compared to 7.4% for the third quarter of 2014.
The HVS also provides a timely measure on household formations – the key driver of housing demand. Although it is not perfectly consistent with other Census Bureau surveys (Current Population Survey’s March ASEC, American Community Survey, and Decennial Census), the HVS remains a useful source of relatively real-time data.
The housing stock-based HVS revealed that the number of households stood at 117.35 million for the third quarter of 2015. This is 1.45 million higher than a year ago and sustains gains recorded at the end of 2014. Growth in household formations will spur rental housing demand first, and ultimately, home sales.