The homeownership rate rose in the third quarter, and economists are pointing to lower mortgage rates as a major reason for the uptick. The homeownership rate rose to 64.8% in the third quarter, up 0.7 percentage points from the previous quarter.
While more Americans are becoming homeowners again, the homeownership rate still remains far from its 69.2% peak in 2004.
However, economists are encouraged by the turnaround in the number of consumers entering homeownership. The third quarter saw a nearly 1.4 million increase in new owner households. For eight of the past 10 quarters, the country has seen an increase in owner households surpass 1 million. Meanwhile, the number of renter households is falling, having dropped 33,000 last quarter.
“This could indicate the start of another upward trend in the homeownership rate as a low mortgage rate environment helps entice some renters to make the switch to homeownership,” noted Ralph McLaughlin, deputy chief economist at CoreLogic, in a blog post.
The homeownership rate among all age groups but the 55–64 age group rose in the third quarter, census data shows. Households led by 35- to 44-year-olds saw the largest increase, up 0.8 percentage points from a year ago.
Overall, the increase in the homeownership rate was “driven by a combination of very strong growth in owner households and a decrease in renter households,” notes McLaughlin. “What’s more, strong owner demand combined with low housing inventory is helping drive homeowner vacancy rates to lows not seen since the early 2000s.”
Source: “Homeownership Rate Jumps on the Tail of Low Mortgage Rates,” CoreLogic Insights Blog (Oct. 29, 2019) and “Homeownership Rate Bounces Back,” National Association of Home Builders’ Eye on Housing blog (Oct. 29, 2019)
