Homeownership Ready to Rise After Hitting an All-Time Lowby
First-quarter gain in owners was biggest in more than a decade
Wage growth, rising confidence pushing more people to buy
The U.S. homeownership rate is finally poised to rise significantly as household formations by owners grew faster in the first quarter than those by renters -- the first time that’s happened in more than a decade.
While the share of Americans who owned their homes was up only slightly from a year earlier, at 63.6 percent, the number of new owners jumped by more than 850,000, compared with an increase in renter households of 365,000. The 1.1 percent year-over-year gain in owners was also the biggest since 2006, according to an analysis by Trulia of Census Bureau data released Thursday.
The homeownership rate, which sunk last year to the lowest level in data going back to 1965, had been losing ground because young people leaving home tended to rent rather than buy. That diluted the number of owner-occupant households. Now, with consumer confidence on the upswing and wages increasing, first-time buyers are being drawn into the market after years of saving for down payments.
“It’s a significant reversal of what we’ve seen,” Ralph McLaughlin, chief economist for Trulia, said in a phone interview. “I was starting to get depressed that we would never see any optimistic news about the homeownership rate kicking up. But now these are signs that we may have hit bottom.”
The homeownership rate reached a peak of 69.2 percent in June 2004. A few years later, the housing crash caused credit to tighten and resulted in millions of Americans losing their properties to foreclosure.
A proposal by President Donald Trump to raise the standard tax deduction would probably help increase homeownership in the long run by putting more money into Americans’ pockets and giving more renters an incentive to save for a down payment, McLaughlin said.
Rising prices and supplies of listings that are near the lowest on record are holding back some potential buyers. Contracts to purchase previously owned homes in the U.S. slipped 0.8 percent in March after rising a month earlier by the most since 2010, the National Association of Realtors reported Thursday.