By: Mark Lieberman, Five Star Institute Economist
The number of households owning homes fell 698,000 to 74,511,000 in the first quarter, the first decline in almost two years, according to a Census Bureau report Tuesday. At the same time, the nation’s homeownership rate fell to 65 percent (seasonally adjusted), the lowest level since the fourth quarter of 1995.
The homeownership rate peaked at 69.2 percent in the second quarter of 2004. The rate measures the proportion of households owning their primary residence, computed by dividing the number of household that are occupied by owners by the total number of occupied homes. A year ago and in the previous quarter, the homeownership rate stood at 65.4 percent.
The Census Bureau also reported the homeowner vacancy rate rose to 2.1 percent in the first quarter from 1.9 percent in the fourth quarter. The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant for sale.
The Census data paints a grim picture for the home sales market, which has already been struggling against mortgage restrictions and weak inventory. The Census report suggests homeownership may have lost its place in the “American dream” as a new generation of potential homebuyers may have become wary of homeownership as a result of the wave of foreclosures in the last several years.
The number of housing units for sale in the first quarter, Census reported, was 1,609,000, up from 1,498,000, in the fourth quarter but down from 1,653,000 one year earlier. The report confirmed assertions by the National Association of Realtors of weak inventories. The number of housing units held off the market in the first quarter though was 7,609,000 up from 7,299,000 in the fourth quarter and but down from 7,633,000 a year ago.
The weak homeownership rate combined with an increase in homes for sale suggests opportunities for home sales. At the same time, the profile of homeowners, by age, is changing.
The homeownership rate for older Americans—65 and over—dipped in the first quarter to 80.4 percent, the lowest level since the second quarter of 2010 when it was also 80.4 percent. The rate was 80.7 percent in the fourth quarter.
The homeownership rate for those under 35 fell to 36.8 percent in the first quarter from 37.1 percent in the fourth quarter. The homeownership rate for those under 35 was as high as 43.0 percent in Q3 2006.
According to the quarterly report, the number of housing units in the first quarter was 133,082,000 up from 132,961,000 in the fourth quarter and from 132,596,000 one year earlier.
According to the Census Bureau, 18,439,000 units were vacant, up from 17,927,000 in the fourth quarter but down from 18,474,000 a year earlier.
Regionally, the homeownership rate rose only in the Midwest, up to 70.0 percent from 69.7 percent in the fourth quarter. The homeownership rate fell to 62.5 percent in the Northeast from 63.9 percent in the previous quarter—affected in part by Superstorm Sandy. In the South, the rate fell to 66.5 percent from 67 percent and fell to 59.4 percent from 59.5 percent in the West.
Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 8:45 am eastern time.
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