Homeownership Rates Are Rising
The homeownership rate rose in the third quarter, and economists are pointing to lower mortgage rates as a major reason for the uptick. The homeownership rate rose to 64.8% in the third quarter, up 0.7 percentage points from the previous quarter.
While more Americans are becoming homeowners again, the homeownership rate still remains far from its 69.2% peak in 2004.
However, economists are encouraged by the turnaround in the number of consumers entering homeownership. The third quarter saw a nearly 1.4 million increase in new owner households. For eight of the past 10 quarters, the country has seen an increase in owner households surpass 1 million. Meanwhile, the number of renter households is falling, having dropped 33,000 last quarter.
“This could indicate the start of another upward trend in the homeownership rate as a low mortgage rate environment helps entice some renters to make the switch to homeownership,” noted Ralph McLaughlin, deputy chief economist at CoreLogic, in a blog post.
The homeownership rate among all age groups but the 55–64 age group rose in the third quarter, census data shows. Households led by 35- to 44-year-olds saw the largest increase, up 0.8 percentage points from a year ago.
Overall, the increase in the homeownership rate was “driven by a combination of very strong growth in owner households and a decrease in renter households,” notes McLaughlin. “What’s more, strong owner demand combined with low housing inventory is helping drive homeowner vacancy rates to lows not seen since the early 2000s.”