The Economy

Homeownership Rates Lowest in Nearly 40 Years

But experts think the rate is close to bottoming out.
Katie Kuehner-HebertJuly 29, 2015
Homeownership Rates Lowest in Nearly 40 Years

Homeownership rates are at their lowest in nearly forty years, as more people choose to rent, according to the U.S. Census Bureau.

The U.S. homeownership rate was 63.4% second quarter, down from 63.7% in the previous three months, and the lowest reading since 1967. Meanwhile, the rental vacancy rate fell to 6.8%, from 7.1% in the first quarter and 7.5% a year earlier. It was the lowest rate since the 1980s, according to the bureau. The median asking rent nationwide was a record $803 a month.

A Bloomberg story on Tuesday said that stringent mortgage standards and sluggish wage growth hasn’t kept up with surging home prices, causing would-be homebuyers to stay out of the market.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Home values have jumped 34% since reaching a bottom in early 2012, making purchases more expensive for entry-level buyers. Prices in 20 U.S. cities climbed 4.9% in May from a year earlier, the S&P/Case-Shiller Home Pridce Index showed Tuesday.

At the same time, the average household income in June was 4% below a record high set in early 2008, even as unemployment dropped to its pre-recession rate, according to Sentier Research LLC.

“We’re still suffering the effects of the housing collapse and the financial crisis,” Wells Fargo Securities senior economist Mark Vitner told Bloomberg. “We may have another percentage point to go before we see a bottom” in the homeownership rate.