At 67.4% nationally, rates are the highest since 2009.

By Manuel Gutierrez, Consulting Economist to NKBA

Following second-quarter gains in homeownership, rates continued to rise in Q3, to 67.4%, 2.6% percentage points ahead of last year — an encouraging sign for the remodeling business. The chart below displays third-quarter rates for each year back to 2010.

Rates are now highest in a decade, but still lag peak homeownership of 69% back in 2004. The trend had been climbing steadily since the early 1990s until the 2004 high point, partially as a result of questionable lending practices and government policies that encouraged homeownership at all costs. The reliance on subprime mortgage loans by many consumers, combined with a drop in home prices around 2004, resulted in many homeowners with mortgage debt exceeding the market value of their homes. This led to several million  foreclosures, and by 2016, there were 1.7 million fewer homeowners than in 2008.

The tide turned this year, with an increase of nearly six million homeowner households. That translates into 7.5% more homeowner households in Q3 than the same period a year ago, bringing the total of U.S. homeowners to 85.4 million.

Not surprisingly, over the last year, the number of renters fell by nearly 2 million to a total of 41.3 million renter households, 4.6% fewer than a year ago.

All four U.S. regions now have higher homeownership rates than a year ago. The Midwest leads at 71.2%, an increase of 2.2 percentage points over a year ago.

The South registered the largest gains, with homeownership increasing by 4.6 percentage points to 70.8%, closing the gap in overall percent ownership with the Midwest.

The lowest increase in homeownership was in the Northeast, which grew by under a half point to 62%. The region is dominated by a large number of renters in metropolitan areas like New York and Boston, where homeownership can be 50% or lower in select areas.

Along with regional homeownership gains, the third quarter also showed increases when measured by age.

The largest were among younger households, led by those whose household head was in the 35-to-44 age group. The increase was by 3.6 points over last year to 63.9%. Households headed by those under 35 years of age saw home ownership rise by 2.7 points, to just over 40%.

The gain for all other age groups was under two percentage points, above  historical norms. In absolute terms, the older the age group, the higher the percentage of home ownership, with 80.7% of those age 65 and older owning a home, double the 40.2% for those under age 35.

*Please Note: Homeownership data gathering has been modified by the Census Bureau due to the pandemic. Results are normally derived through a combination of  personal and telephone interviews, but the shutdown limited the personal portion over the past few months. As a result, completed surveys are running about 10% below normal, which can potentially bias results.