Strong Owner Household Formations in the Second Quarter


According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate was 64.3% in the second quarter 2018. After dropping to a cycle low of 62.9% in the second quarter 2016, the national homeownership rate seems to be on a sustainable upward trend. Compared to the peak of 69.2% in 2004, the homeownership rate is lower by five percentage points.

The count of total households, however, increased to 121 million in the second quarter 2018 from 119 million at the same period in 2017. The gains were predominantly driven by owner households, while renter households only increased 146,000.

The homeownership rates among all age groups under 54 increased over the last year. Households ages 45-54 registered the largest gains among all households, a 1.3 percentage points increase from a year ago. The homeownership rates of millennials, mostly first-time homebuyers, continued the up growing trend, from 35.3% to 36.5%. It suggests that millennials are gradually returning to the for-sale housing market. However, current homeownership rates for adults ages under 35 are still 5.4 percentage points lower than before the Great Recession. Households ages 35-44 experienced a 1.2 percentage points increase on an annual basis.

The nonseasonally adjusted homeowner vacancy rate remained low at 1.5% in the second quarter 2018At the same time, the national rental vacancy rate declined to 6.8%, down by 0.2% from last quarter.

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 121.2 million in the second quarter of 2018, 2.3 million higher than a year ago. The gains are largely due to strong owner household formation. Indeed, the number of homeowner households has been rising since the third quarter 2016, while the number of renter households has been on the downward trend. In the second quarter 2018, the number of homeowners increased by 2.2 million, while the number of renter households rose by 146,000.


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