According to the Census Bureau’s Housing Vacancy Survey (HVS), the nation’s homeownership rate in the last quarter of 2015 was 63.8%. However, the homeownership rate was still down by 20 basis points on a nonseasonally adjusted basis from the last quarter of 2014 to the last quarter of 2015.
Compared to the peak at the end of 2004, the homeownership rate has steadily decreased by 5.4 percentage points and remains below the 25-year average rate of 66.2%.
The homeownership rate for Generation X increased to 59.3%, up by 0.5% on a year-over-year basis, while homeownership rates continued to decline for other age groups. The homeownership rate for household heads older than 65 years old (79.3 %) decreased by 20 basis points from the fourth quarter of last year. The largest declines, however, are for those aged less than 35 and aged 55-64, with an annual drop of 60 basis points.
The nonseasonally adjusted homeowner vacancy rate remained low at 1.9% in the fourth quarter 2015.The national rental vacancy rate also remained unchanged at 7% for the third quarter on a nonseasonally adjusted basis, compared to that 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 117.78 million for the fourth quarter of 2015. This is half million higher than a year ago and sustains gains recorded at the end of 2014. On a less volatile one-year moving average, the increasing trend of household formations is clearly shown in the graph above. On a one-year moving basis, the pace of household increase is maintained at more than 1% in 2015, with 1.1% increase at the end of 2015. Growth in household formations will spur rental housing demand first, and ultimately, home sales.