Homeownership Rate Edges UP in 3Q; Household Formations Lag

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Homeownership rate in 3Q 2017 was 63.9 percent, UP from 63.7 percent in 2Q and 62.5 percent a year ago;
  • Homeownership rate is at its highest since 4Q 2014;
  • 430,000 MORE household owned homes in 3Q than in 2Q
  • 47,000 MORE vacant homes for sale in 3Q than in 1Q
  • 204,000 FEWER households at end of 3Q than 2Q

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The nation’s housing market improved in the third quarter with an increase in the homeownership rate, the Census Bureau and Department of Housing and Urban Development reported Tuesday.

The homeownership rate which had been moving sideways in a relatively narrow range for the last years, improved 0.2 percentage points to 63.7 percent in the third quarter, despite sluggish sales of both new and existing single-family homes.

The reason for the growth in the home ownership rate (the percentage of households owning homes) is due largely to a quarter-quarter drop in the number of households.

The homeownership rate peaked at 69.2 percent in 2004 and dropped to a 48-year low of 62.9 percent in the second quarter last year.

According to the National Association of Realtors (NAR), sales of existing single-family homes have fallen in five of the first eight months this year and in August were down 1.5 percent year-year. The number of new home sales though rose sharply in August according to a combined Census Bureau-Department of Housing and Urban Development report. The NAR data tracks closings while the government reports on contracts for sale.

The decline in the number of households means there might be fewer buyers of homes – new or used – and continues to reflect a trend of millennials struggling to strike out on their own either because they can’t find suitable jobs or because the jobs they do find make living on their own, as a new household, a financial challenge.

According to Tuesday’s report, the percentage of senior-citizens (over 65) owning homes jumped in the third quarter to 78.9 percent from 78.2 percent in the second quarter. The percentage of under-35 homeowners rose to 35.6 percent but remains well below its pre-Recession high of 43.0 percent.

Hear Mark Lieberman every Friday on the Morning Briefing on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @foxeconomics.

 

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