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Home-Vacancy Rate Rises as Ownership at 10-Year Low

By Kathleen M. Howley - 2011-01-31T16:16:05Z

The U.S. home-vacancy rate, measuring the share of properties empty and for sale, rose to 2.7 percent in the fourth quarter as more residences stood unoccupied after being seized by banks.

The number, up from 2.5 percent in the third quarter, is based on 2.1 million vacant properties for sale out of 74.8 million residences, the Census Bureau said in a report today. The rate that measures the share of people who own their homes fell to a 10-year low of 66.5 percent from 66.9 percent in the previous three months, according to the report.

Measuring empty residences is a gauge of housing supply that includes the so-called shadow inventory of properties not listed with real estate agents, such as bank-owned homes being held off the market. Lenders seized a record number of homes in September, according to RealtyTrac Inc., an Irvine, California- based data firm. Banks may sell directly to buyers, list the homes with real estate agents or decide to keep properties until they determine it’s the right time to put them on the market.

“We’re in a situation with relatively high inventories, and foreclosures are adding to it,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts.

The residential vacancy rate reached a record 2.9 percent in the first and fourth quarters of 2008, the year Lehman Brothers Inc. collapsed and American International Group Inc. was taken over by the U.S. government.

Falling Home Ownership

The home ownership rate has fallen for every quarter since mid-2009 as foreclosures surged, according to Census data. The rate rose to a record 69.2 percent in 2004 as credit standards began to fall, according to the Federal Reserve’s Senior Loan Officer Survey that gauges banks’ willingness to lend.

Foreclosures are included in a part of the Census Bureau report that also tracks vacant properties empty for other reasons, such as renovations. There were 3.6 million such empty homes in the fourth quarter, up from 3.5 million a year earlier, according to the report. Bank seizures also may be counted as owner-occupied homes if lenders haven’t yet evicted previous owners, the federal agency said.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.