U.S. Homeownership Rate Hits 48-Year Low
By Laura Kusisto (The Wall Street Journal)
"The homeownership rate continued to decline in the second quarter of 2015, hitting a 48-year low.
The seasonally adjusted homeownership rate declined to 63.5%, down from 64.7% in the second quarter of 2014, according to estimates published by the Commerce Department on Tuesday. (The homeownership rate, not seasonally adjusted, hit 63.4%.) That is the country’s lowest homeownership rate since 1967.
In the first quarter of 2015 the homeownership rate hit its lowest level since 1989.
In part, the decline in homeownership reflects a positive trend: The number of rental households is growing. That likely reflects the fact that younger people are leaving their parents’ homes and striking out as renters on their own.
Total households in the United States grew to 117 million in the second quarter of 2015, up from 115 million in the second quarter of 2014.
The number of owner households decreased by 400,000, while the number of renter households increased by 2 million. While that is a good sign for the rental market, overall economists said that a lack of home buyers is likely a bad sign that incomes aren’t keeping pace with rising home prices, keeping young buyers out of the housing market.
“In general, I think rising homeownership is a plus for the economy and it signals a strong economy. The fact that it is falling is generally not a good thing,” said Mark Zandi, chief economist at Moody’s Analytics Inc.
The quarterly estimates are viewed as not terribly reliable by some economists, but the overall trend suggests that some weak spots remain in the home ownership market, even as the rental market gains steam.
Mr. Zandi said that some of the decline reflects lingering effects from the foreclosure crisis, as some families continue to lose their homes in states with a long judicial foreclosure process.
Economists are also concerned that many young families don’t seem to be making the transition to homeownership. Higher down payment requirements paired with rising rents and poor income growth have made it difficult for many to save.
Another bit of good news is that vacancy rates for both owner and rental housing continued to decline.
The national vacancy rate was 6.8% for rental housing in the second quarter, down from 7.5% in the second quarter of 2014. The homeowner vacancy rate was 1.8%, down from 1.9% in the second quarter of 2015.
“It’s going to be an incredibly tight housing market as construction starts to ramp up and that is going to be very positive for the economy,” Mr. Zandi said."
—Nick Timiraos contributed to this report.