Despite the ongoing inventory shortage and rising prices, homeownership has stayed relatively steady year over year. According to the U.S. Census Bureau, the homeownership rate year over year remained stable and rose from 63.6 percent in Q1 2017 to 64.2 percent in Q1 2018. Cheryl Young, Senior Economist for Trulia, called this a “significant” increase over the previous year.
“Strong demand boosted by healthy economic fundamentals has been winning over daunting headwinds such as skyrocketing prices and scarce supply,” said Young. “Despite these challenges, millennials led the charge in increasing homeownership, with a 2.92 point annual increase in the homeownership rate compared to a 0.94 point annual increase overall.”
The shrinking inventory, mixed with the healthy economy, has caused a drop in vacancies over the past few years. Since Q1 2010, vacancies have fallen from a rate of 2.6 percent to 1.5 percent in Q1 2018. Year over year, the rate of vacancies dropped from 1.7 percent in Q1 2017 to 1.5 percent in Q1 2018. The low vacancy rate means high home prices have risen even further. As of Q1 2018, the median asking price for a home is $196,700.
“The decline in vacancy rate has been an important, though silent addition to the housing supply,” said Tian Liu, Chief Economist for Genworth Mortgage Insurance. “With vacancy rates now approaching the lowest level since the early-1990s (it troughed in 1993 at 1.4 percent), home prices will likely rise further, and the need for more affordable new homes is also greater. We expect continued improvement in homeownership rates among households headed by people under age 40, supported by a strong job market and improving credit availability.”
The U.S. Census Bureau stated that approximately 87.5 percent of homes in the U.S. were occupied in Q1 2018, while 12.5 percent were vacant. Homeownership was highest in the Midwest, at a rate of 67.9 percent, followed by the South (66.3 percent).