According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate reaches 65.3% in the first quarter 2020. This is 1.1 percentage points higher than the rate of 64.2% in the first quarter of 2019, but not statistically different from the previous quarter reading of 65.1%. Strong owner household formation with around 2.7 million homeowners added in the first quarter has driven up the homeownership rate, especially under the decreasing mortgage interest rates and strong new home sales and existing home sales in the first two months before the COVID-19 pandemic hit the economy.
The HVS 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 124.4 million in the first quarter of 2020, 2.0 million higher than a year ago. The gains are largely attributable to strong owner household formation. Specifically, the number of homeowners increased by 2.6 million, while the number of renter households declined by 0.6 million. Indeed, the number of homeowner households has been climbing since the third quarter of 2015, while the number of renter households has been on a downward trend. This implies that the transition from renting to owning has been a powerful driver of the net increase in households.
The homeownership rates among all age group increased in the first quarter 2020. Households under 35, mostly first-time homebuyers, registered the largest gains, with the homeownership rate up 1.9 percentage points from a year ago. Households ages 35-44 experienced a 1.2 percentage points gain, followed by the 55-64 age group (a 0.9 percentage point increase), the 45-54 age group (a 0.8 percentage point gain), and the 65+ group age (up by 0.2 percentage point).
The nonseasonally adjusted homeowner vacancy rate declined to a record low of 1.1% in the first quarter, signaling a supply-constrained housing market, while the rental vacancy rate increased to 6.6% from 6.4% in the last quarter of 2019.
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