Q2 2018 Homeownership Rate: Rapid Reaction

• The Q2 2018 U.S. homeownership rate was 64.3 percent, up modestly from 64.2 percent in Q1 2018 and 63.7 percent in Q2 2017, according to the U.S. Census Bureau.
• The homeownership rate among those under the age of 35 jumped to 36.5 percent, the highest level since the end of 2013 and up strongly from 35.3 percent a quarter ago and at this time last year.
• The national rental vacancy rate edged lower, to 6.8 percent from 7 percent in Q1 and 7.3 percent a year ago. The homeowner vacancy rate was unchanged at 1.5 percent.

Over the past two years, millennials have been on a home shopping spree, driving a bump in the overall homeownership rate in Q2. Homeownership among younger households still remains well below pre-crisis and pre-bubble norms, but those same groups are currently experiencing some of the biggest gains. At the same time, household formation among renters was anemic for a fifth consecutive quarter, which has contributed to softer rent growth nationwide. During the decade from 2006 through 2016, renter household formation dominated overall household formation with renters accounting for almost all new households nationwide. But in mid-2016, that decade-long dynamic began to shift. Rental vacancy rates remain low by historic standards – particularly in the urban centers that have seen the strongest rent gains in recent years. As interest rates rise and purchase affordability becomes more stretched over the next year, the pendulum could swing back toward more renter household formation.