Homeownership Rate Bottomed Out?

According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate was 63.7% in the second quarter 2017, which is statistically no different from its last quarter reading of 63.6%. The rate of homeownership appears to be stabilizing after reaching a cycle low of 62.9% in the second quarter 2016. It was 1.3% higher than a year ago and follows the first annual gains since the Great Recession recorded in the first quarter of 2017 (0.2% increase). This may be a sign that the homeownership rate has bottomed out.

Compared to a year ago, homeownership increased among all age groups, with the largest gains recorded by millennials. The millennial homeownership rates increased 1.2%,followed by the households aged 55-64 rose by 0.7%. This suggests that households, especially younger and middle-age homebuyers, are gradually returning to the housing market after the Great Recession.

The nonseasonally adjusted homeowner vacancy rate remained low at 1.5% in the second quarter 2017, down by 0.2% from previous quarter. At the same time, the national rental vacancy rate increased to 7.3%, compared to only 6.7% second quarter 2016.

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 118.9 million during the second quarter of 2017. This is 0.6 million higher than a year ago. Indeed, the number of homeowner households rose by 1.3 million, the largest gain since 2006. However, the number of renter households declined by 700,000 last year, the first time decline since the Great Recession.



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