Not only are homeownership rates up over the year, but according to the Homeownership and Vacancy Survey released by the U.S. Census Bureau on Thursday, the number of owner-occupied households is growing at a faster rate than renter households. It’s only the second time in more than a decade this has happened.
According to the report, the U.S. homeownership rate is now at 63.7 percent—as of the close of Q2. This marks a notable jump from last year’s 62.9 percent rate. According to Trulia’s Chief Economist, Ralph McLaughlin, the change was “rare” and “statistically significant.”
But even bigger news than the rising rate of homeownership rate? McLaughlin says it’s the fact that owner-occupier growth outpaced renter growth.
“There is more surprising news from this quarter’s report,” McLaughlin said. “For only the second time in 11 years—and for the second consecutive quarter—owner-occupied households grew faster than renter households over the year.”
According to the report, new owner-occupied households grew by 1.26 million over the last year, while renter households actually declined, dipping by more than 700,000 for the same period. McLaughlin says this may be a good sign that homeownership rates may be turning around—and for good.
“Strong renter household formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis,” McLaughlin said. “The fact that we now have two consecutive quarters where owner households outpaced renters is a strong sign this trend is reversing and that the homeownership rate bottomed out last year.”
Vacancy rates were also up on rental properties, rising 0.3 percentage points for the quarter, while vacancies on owner-occupied homes were down, dipping 0.2 percentage points since Q1.
But it’s not all good news, McLaughlin says. There are still major hurdles keeping potential buyers out of the market.
“While this is exciting news for champions of homeownership in the U.S., those looking to get into the door of homeownership still face headwinds,” he said. “Home prices are again outpacing rents, which makes homeownership less attractive, while the meager supply of homes on the markets makes finding a starter home a particularly daunting exercise.”