The U.S. homeownership rate fell to the lowest in almost 18 years, reflecting rising demand for rentals and investor purchases in the housing market.
The share of Americans who own their homes was 65 percent in the first quarter, down from 65.4 percent a year earlier and the lowest level since the third quarter of 1995, the Census Bureau reported today. The vacancy rate for rented homes dropped to 8.6 percent from 8.8 percent a year earlier, while vacancies for owner-occupied houses fell to 2.1 percent from 2.2 percent.
Investors are buying single-family homes and renting them out to capitalize on demand among families unable to qualify for a mortgage. Their purchases, many made with cash, are helping to support the housing recovery and pushing up prices. Home values in 20 cities increased 9.3 percent in February from a year earlier, the most since May 2006, according to the S&P/Case- Shiller (SPCS20Y%) index released today.
Slideshow: Best Big Cities for Renters
“Credit conditions are still tight and investors are taking advantage, in the interim, of favorable yields,” Paul Diggle, property economist for Capital Economics in London, said in a telephone interview. “They’re making hay while the sun shines.”
Diggle said the homeownership rate will continue to fall throughout the year. It peaked at 69.2 percent in June 2004, spurred by easy credit.
“Tight credit, tight for-sale inventory, the challenge of saving for a down payment, and more rental single-family supply all helped lower the homeownership rate,” Jed Kolko, chief economist for Trulia Inc. (TRLA), a San Francisco-based online real estate information service, said today in a statement.
The number of homes on the market in March was down 16.8 percent from a year earlier, the National Association of Realtors said last week.
The number of occupied residences increased to an estimated 114.6 million in the first quarter from 114.1 million a year earlier, according to the Census Bureau. The number of renter- occupied homes rose to 40.1 million from 39.5 million. Owner- occupied residences slipped to 74.5 million from 74.6 million.
To contact the editor responsible for this story: Kara Wetzel at email@example.com