Homeownership Rate on the Rise
Household formation is strong so far, this year, after the second consecutive quarter of gains. The US Census Bureau reported the homeownership rate improved by 0.1% quarter-over-quarter and is up 0.8% year-over-year, hitting a three-year high. With rates still historically low, more first-time home buyers are entering the market with confidence and boosting the homeownership rate.
Specifically, the homeownership rate among those under 35-years-old is now over 35%, the highest level in the past two years. According to Zillow Chief Economist Svenja Gudell the strong labor market and rising rents are both contributing factors. The biggest obstacle renters face when trying to buy a home is saving for a down payment. However, even with affordability issues, renters are taking advantage of down payment assistance and other programs to make the transition into homeownership possible.
National Association of Realtors (NAR) Chief Economist Lawrence Yun commented, “the addition of 1.2 million households being homeowners is clearly good news, as more households are participating in housing equity gains.” He goes on to emphasize that there are still fewer homeowners than a decade ago, and renter households now total approximately 8 million.
Even as the homeownership rate hits a three-year-high, some experts warn that the homeowner vacancy rate also hit a 17-year-low. This critical data points to the issue of housing inventory shortage. Buyers have less available listings to choose from and owners are occupying their homes longer to build wealth amidst rising home equity.