U.S. Homeownership Rate

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the homeownership rate.

• The U.S. homeownership rate remained roughly stable at 65.2 percent in the 4th quarter of 2013 from 65.3 in the 3rd quarter of the same year. It was also roughly the same as the 4th quarter of 2012 when the rate was 65.4 percent. If adjusted for seasonal variation, the rate has remained stable at 65.1 percent since the second quarter of 2013.
• The Census Housing Vacancy Survey, the source of this data, shows that there are just shy of 115 million households in the U.S. and slightly fewer than 75 million of those households own the home that they live in. This also means that every one percent change in the homeownership rate at this population size results in a shift of 1.2 million households from renting to owning or vice versa.
• The Census bureau actually has several estimates of the homeownership rate which are slightly different and typically show similar trends. This particular data source has been published quarterly since 1965. As shown in the graph below, this is not the first boom and bust that we’ve seen in the homeownership rate. From the beginning of the series in 1965 through 1980 the homeownership rate was on a slow and steady rise from a low of 62.9 percent. In 1980 it peaked at 65.8 percent before falling back to 63.5 in 1985.
• From its 1985 low through 1995 the homeownership rate remained in a roughly narrow range of 63.5 to 64.5. In 1995, the homeownership rate began a steady ascent that peaked at 69.2 percent in 2004. Since that time, the rate has receded, but at slightly higher than 65 percent, it remains higher than the 1985 to 1995 norm. With a year’s worth of readings around the 65 percent mark, has homeownership reached its near-term low? Will it stabilize at 65 percent for a long time as it did in the late eighties and early nineties or will it climb again? Only time will tell.
• In favor of a stabilizing homeownership rate, homeownership rates have begun to rise in the Midwest and South—regions with homeownership rates already above the US average. By contrast, homeownership in the West continues to slump and the pattern in the Northeast varies substantially from quarter to quarter.