After an unexpected drop, the rate is off by 2.5 percentage points year-over-year.
By Manuel Gutierrez, Consulting Economist to NKBA
Key Takeaways:
- Those under age 35 and 45 to 54 report largest percentage drop.
- By region, the South was hit the hardest.
- On the plus side, ownership of second homes increased by 11.3%.
The U.S. homeownership rate unexpectedly fell in the second quarter to 65.4%, down 2.5 percentage points from the rate of 67.9% achieved in the second quarter of 2020 (Figure 1). However, compared to the 65.6% posted in the first quarter of this year, the rate did not change materially.
The second-quarter decline cancels two-thirds of last year’s gain, which had brought the rate up to 67.9%. The pandemic and economic shutdown convinced many homeowners to move out of densely populated dwellings in large, congested cities in favor of homes in less-populated areas — ex-urban, suburban or rural. Many of them purchased second homes in resort areas.
Data from the Commerce Department on second homes indicates their number increased in the second quarter by 11.3% to 3.8 million homes. Still, it wasn’t enough to compensate for the dip, or result in an increase in the total percentage of people owning a home.
Ownership of second homes increased by 11.3% in the second quarter, and now totals 3.8 million units.
The homeownership rate fell across all age groups. Figure 2 (left panel), shows that the largest declines were among two groups. The youngest homeowners, those under 35 years of age, saw their rate fall by 2.8 percentage points to 37.8%. This age group has the lowest ownership rate because it includes millions of students who are not homeowners, but instead live in rental units or group quarters, such as school dormitories.
The second age group showing a large drop in ownership rate is more surprising: households headed by those aged 45 to 54. It also fell by the same 2.8 percentage points, but, at 69.4%, this age group has a much higher ownership rate.
Similar to age demographics, ownership all also fell among all racial or ethnic groups (Figure 2, right panel).
The biggest decline by far was among Hispanics, who already have the second-lowest rate of ownership. This group’s drop of 3.9 percentage points lowers their total homeownership rate to 47.5%. One general reason is because many Hispanics are younger than the overall population and thus less likely to have accumulated enough wealth to become homeowners.
Finally, Figure 3 shows that geographically, homeownership declined across all four regions.
The largest drop was in the South, where homeownership fell four percentage points to 67.1%. This drop nearly wiped out the substantial gain the region achieved last year. In fact, as shown in the lower left panel of Figure 3, the South’s rate hit an all-time record last year, when it was at 71.1%, before falling this year.
The West posted the second-biggest drop in homeownership, falling by 2.5 points to 60.1%. It also has the lowest rate among all regions.
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