The nation’s homeownership rate dropped in the first quarter to its lowest in nearly two decades as affordability challenges and tight credit conditions continued to hamper sales activity.
According to figures released by the Census Bureau Tuesday, homeownership dropped last quarter to a rate of 64.8 percent, 0.4 percentage points lower than Q4 2013 and the lowest rate since the third quarter of 1995.
Quarter-to-quarter, homeownership was down in all regions except the West, though at 59.4 percent, it remains lower in that region than in any other.
At the national level, at least part of the blame for the falling homeownership rate can be laid on a combination of rising home prices and mortgage rates, which have combined to push housing out of the reach of a growing number of Americans. In fact, in a report released earlier this month, Zillow found that across the nation’s biggest major metros, nearly one-third of for-sale homes are considered “unaffordable” by historical standards for households earning the median income, and that number is expected to grow.
Also challenging homeownership is today’s credit environment, which has many potentially qualified Americans convinced they’re ineligible to secure financing.
Homeownership remained especially low among the Millennial age group, falling to a rate of 36.2 percent, with blame split between high debts, an elevated unemployment rate, and a perceived cultural shift away from the ideal of homeownership at a younger age.
Also down was homeownership among those age 65 and older, which fell nearly a full percentage point to a still-high 79.9 percent.
Mark Vitner, senior economist for Wells Fargo's Economics Group, says the drop in homeownership rates among seniors may actually stem from a common trait they share with younger Americans: "We are seeing increased interest by Millennials and seniors in living closer to the inner city, where rental options are abundant."
Among white Americans, homeownership slipped half a percentage point to 72.9 percent, while the rate among blacks was up slightly to 43.3 percent. Among all other races, the government reported the homeownership rate was down to 55.8 percent.