According to Census Bureau’s Housing Vacancy Survey (HVS), the homeownership rate dropped to 62.9% in the second quarter of 2016. It is the lowest level since 1965, when the Census Bureau started tracking these data. This was a second straight quarterly decrease, down by 60 basis points on a nonseasonally adjusted basis from three months ago.
The homeownership rate continued to decline for all age groups except for Generation X, on an annual basis. The homeownership rate for Generation X increased modestly to 58.3%, up by 0.3% since a year ago. The homeownership rate for household heads older than 65 years old (77.9 %) decreased by 60 basis points. The largest declines, however, were for those ages less than 35 and 55-64, with an annual drop of 70 basis points.
The nonseasonally adjusted homeowner vacancy rate remained low at 1.7% in the second quarter of 2016. At the same time, the national rental vacancy rate dropped to 6.7%, down 10 basis points from the second quarter of 2015.
The HVS also provides a timely measure of 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 increased to 118.3 million for the second quarter of 2016, almost a million higher than a year ago. On a less volatile one-year moving average basis, the pace of household formations slowed down to less than 1% in 2016.