Homeownership Rates Bounce Back As Renting Declines

People may say millennials are killing homeownership, but the homeownership rate saw an increase in the third quarter of 2019. More people are buying over renting versus last year as the homeownership rate climbs back to where it was before it started its major downturn, hitting a low point in 2016. 

According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate increased to 64.8% in the third quarter of 2019, which is 0.7 percentage points higher than the previous quarter reading of 64.1%. This puts the national homeownership rate back to a level near where it started dropping as interest rates increased. The rate reached a cycle low of 62.9% in the second quarter 2016. Compared to the peak of 69.2% by the end of 2004, the homeownership rate is still 4.4 percentage points lower and remains below the 25-year average rate of 66.3%.

The HVS also provides a timely measure of household formations – the key driver of housing demand. The housing stock-based HVS revealed that the count of total households increased to 122.7 million in the third quarter of 2019 from 121.4 million a year ago. The gains are largely attributed to strong owner household formation. Indeed, the number of homeowner households has been climbing since the third quarter of 2015, while the number of renter households has been on a downward trend. This implies a transition from renting to owning is the powerful driver of household change. Specifically, the number of homeowners increased by 1.4 million, but the number of renter households declined by 33,000 in the third quarter.

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