Homeownership at 18-year Low, Underscores Housing Fragility

Tuesday, 29 Apr 2014 12:07 PM

 

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Homeownership in the United States fell in the first quarter to its lowest level in more than 18 years, suggesting it will take a while for housing to heal from the 2007-2009 recession's deep scars.

The seasonally adjusted homeownership rate, the share of households owning a home, slipped to 65 percent, the Commerce Department said on Tuesday. That was the lowest reading since the third quarter of 1995.

Homeownership, which peaked at 69.4 percent in 2004, had hovered at 65.1 percent since the second quarter of last year. The latest slide is a bad signal for housing, whose recovery has faltered after a run-up in mortgage interest rates last summer.

A combination of high unemployment, stringent lending practices by financial institutions and high house prices is pushing home buying out of the reach of many Americans.

The low ownership rate also suggests the housing market recovery of the last three years was driven by investors who were snapping up properties and converting them into rental units.

While the residential rental vacancy rate ticked up by a tenth of a percentage point to 8.3 percent in the first quarter, it was well below its 11.1 percent peak in 2009.

In the first quarter of 2014, the median asking monthly rent was $766, up from $746 in the prior three months.

Homeownership continued to decline for those 35 years old and younger, but held steady for those between 45 and 54.

© 2014 Thomson/Reuters. All rights reserved.

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