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Rapid Reaction: Q4 2017 Homeownership Rate

After bouncing around near 50-year lows for the past few years, the national homeownership rate finally seems to be gaining sustainable, meaningful upward momentum.

Written by Aaron Terrazas on January 30, 2018

The U.S. homeownership rate (non-seasonally adjusted) rose to 64.2 percent in the fourth quarter of 2017, up from 63.9 percent in Q3 and 63.7 percent a year ago and the highest level since Q3 2014, according to the U.S. Census Bureau. The seasonally adjusted rate was 64 percent, compared to 63.9 percent in Q3 and 63.5 percent a year ago.
Homeownership by black and Hispanic residents rose to 42.percent and 46.6 percent, respectively. Asian and white homeownership also rose.
The U.S. rental vacancy rate was 6.9 percent in Q4, down from 7.5 percent in Q3 and unchanged from a year ago. The rental vacancy rate was lowest in suburban areas (6.2 percent) and highest in rural areas (7.9 percent). The urban rental vacancy rate was 7.3 percent.

After bouncing around near 50-year lows for the past few years, the national homeownership rate finally seems to be gaining sustainable, meaningful upward momentum. The fourth quarter of 2017 was unseasonably strong, driven by buyers determined to make a deal in a highly competitive market. And for would-be buyers struggling to save for a down payment or figuring out how to make the monthly mortgage math pencil out, changes in the tax code that potentially put more money in their pockets could be the push they need to move out of an apartment and into a first home. The rapid growth in rents and renter households that characterized the early years of the housing recovery has subsided and stabilized to a large degree as the flood of new rental units begun a few years ago begin to open for occupancy. With rental supply now at least somewhat more balanced to renter demand, developers are likely to shift their focus back to the broader for-sale market, which is starving for new supply. Assuming newly built homes are located in relatively accessible areas and are priced at a reasonable level, builders should have little trouble finding buyers for them. All of these factors point to continued growth in homeownership in coming quarters, however slow.