The Q1 2019 U.S. homeownership rate was 64.2%, down slightly from 64.8% in Q4 2018 and virtually unchanged from Q1 2018, according to the U.S. Census Bureau.
The homeownership rate among those under the age of 35 dropped 1.1 percentage points during the first quarter to 35.4%, reversing most of the gains of the past year and putting homeownership rate for this group more or less flat from a year ago.
The only region that saw an uptick in the homeownership rate was the South, where it climbed to 66.2%.
The rental vacancy rate of 7% was virtually unchanged from the rate in the Q1 2018, but 0.4 percentage points higher than the Q4 2018 rate of 6.6%.
With the national homeownership rate essentially flat from a year ago, it remains just slightly below the historic average of 65.2% dating back to the 1960s. It’s still a ways off from the all-time highs approaching 70% set in the early 2000s, but in hindsight those lofty peaks may not have been sustainable. The quarterly decline in homeownership is shared across all ages, but is most disappointing for those in the under 35 and 35-to-44-year-old age brackets, the two groups driving the homeownership rate gains over the last few years.
Anemic homeownership rate growth among younger buyers signals the difficulties many of those buyers continue to face in securing a down payment, finding a home in their budget or qualifying for a loan. These hurdles–combined with potential shifts in preferences and/or a simple delay in the many “adulting” events like marriage and children that precipitate buying a home–can have the effect of keeping younger, would-be buyers in rental housing for a longer time. This rental market persistence, coupled with the sheer size of the 20-and-30-something population, is keeping rental vacancy rates low at 7% nationally and puts upward pressure on rents themselves.
Multifamily permitting activity has been high in recent years, but the reality is that as much as it feels like we’re building abundant rental units, it’s not enough to make up for a decade-long shortfall experienced during the housing boom, bust and early recovery.
Continued gains in homeownership will rely on more renters finding ways to clear these increasingly high hurdles. It’s unclear they will.
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