The U.S. home-vacancy rate, a measure of properties empty and for sale, fell to the lowest level since 2006 as demand for housing improved and lenders slowed property repossessions.
The rate declined to 2.1 percent in the second quarter from 2.2 percent in the previous three months and 2.5 percent a year earlier, the Census Bureau said today in a report from Washington. A gauge that measures the share of Americans who own their homes rose to 65.5 percent from a 15-year low of 65.4 percent in the prior quarter.
The inventory of available homes is dwindling amid growing investor purchases of discounted foreclosures and other distressed properties. Public builders, which have reported increased orders this year, are turning out new houses to meet demand from traditional buyers who are being crowded out by cash-paying investors.
The vacancy decline “means builders will have another reason to start ramping up on construction,” said Patrick Newport, an economist for IHS Global Insight in Lexington, Massachusetts. “The reason home construction has been so low since 2009 is because so many people moved back in with their parents. The household formation rate just dropped sharply so we didn’t need to build a lot of homes.”
While foreclosure starts rose 6 percent in the second quarter from a year earlier, the first annual increase since 2009, home seizures fell 22 percent, according to data provider RealtyTrac Inc. Lenders have been using alternatives to repossessions such as short sales, where the price is less than what the delinquent borrower owes. One advantage to a short sale is that the property doesn’t sit vacant.
The home-vacancy rate in the second quarter matched the 2.1 percent rate reached in the first three months of 2006.
For rental homes, the vacancy rate fell to 8.6 percent in the second quarter, the lowest since the second quarter of 2002. The rate was 9.2 percent a year earlier and 8.8 percent in the first quarter, the Census Bureau said in today’s report.
The homeownership rate in the second quarter declined from 65.9 percent a year earlier, according to the report. It reached a record 69.2 percent in June 2004. Foreclosures, strict lending standards and an unemployment rate stuck above 8 percent are limiting home purchases and pushing more people into rentals.
The U.S. added 5 million more renter households since the homeownership rate peaked, according to Greg Willett, vice president of MPF Research, a Carrollton, Texas, based apartment-data firm that is a division of RealPage Inc.
“There’s a doubling up and a tremendous amount of young adults living with mom and dad,” Willett said.
About 1.5 million to 2 million people in their 20s and early 30s who normally would be living on their own now live with their parents, he said.
The homeownership rate may drop further as lenders step up actions against delinquent borrowers following an agreement in February by the nation’s biggest lenders to settle allegations of abusive practices.
The share of American who own their homes may drop to 64 percent within two years, Paul Diggle, property economist for Capital Economics Ltd., wrote in a note today.
The decline is temporary, and buyers will return to the market when economic pressures ease, Diggle said yesterday in a telephone interview from London.
“Homeownership is still viewed as a central idea of the American dream so I think demand will come back,” he said.