Home Ownership Rate Near 20-Year Low
July 31, 2014
The fallout from the housing crisis continues as the number of Americans who own homes dropped to the lowest level in nearly two decades in the second quarter, the U.S. Department of Commerce reports.
The latest report shows that 64.8 percent of U.S. homes were owner-occupied in the second quarter, down from 65 percent in the first quarter and marking the lowest level since the third quarter of 1995. Los Angeles and Orange counties in California saw the lowest home ownership rate of any metro area in the country, with owners occupying just 49.1 percent of homes.
Home Ownership Matters
"The falling home ownership in recent years is partly due to the struggles of first-time buyers," National Association of REALTORS® chief economist Lawrence Yun writes on the Economists' Outlook blog. "Lower wages and larger student debts among recent college graduates have limited the Millennial generation from taking advantage of the historically low interest rates."
The home ownership rate for people under age 35 remains historically low at 35.9 percent.
In 2004, home ownership peaked at 69.4 percent. That number has been dropping steadily ever since.
Yun notes that there was a higher number of home owners in the latest data than in prior months, but the number of renters grew faster. He says that over the past three months, the number of renting households rose by 312,000 while the number of home owners rose by 54,000.
"The strange pattern of more home owners but a falling home ownership rate will continue for the next two years at least," Yun notes. "That's because household formation of young adults who had been living with their parents will seek out their own housing with an improving economy, first as renters before making the shift to home owners. This trend also means that housing demand for both home purchases and rentals will be on the increase."
Source: “Homeownership Rate in Second Quarter of 2014,” National Association of REALTORS® Economists’ Outlook Blog (July 30, 2014) and “U.S. Homeownership Rate Slides to Lowest Level Since 1995,” Los Angeles Times (July 29, 2014)
Updated: June 21, 2018