Key Takeaways:
- At 65.4%, level of homeownership is two percentage points below a year ago.
- Compared with 2000, there are 15.8% more homeowners today, but 28.7% more renters
- By age, those 65+ lead with nearly 80% owning a home, vs. just 38.5% for those under 35
By Manuel Gutierrez, Consulting economist to NKBA
In an unexpected reversal, the homeownership rate fell in the third quarter to 65.4%. This is a two-percentage- point drop from a year ago and follows four consecutive annual increases in homeownership from 2017 through 2020.
Figure 1 supports that the current rate is virtually the same as the long-term average of 65.3%, highlighted by the dotted line. Further, the current rate is 3.8 percentage points below the all-time record of 69.0% set in 2006.
The drop in the rate came as a surprise, given the strong demand for housing -primarily single-family – that has occurred over the last year or so.
it is possible, however, that with COVID-19 still a factor, the U.S. Department of Commerce had to modify the way it collects survey data, and this could have impacted the results.
Homeownership surprisingly drops in Q3, reversing a steady upward trend since 2017.
Excluding last year’s jump to 67.4%, which could be an anomaly, the rate has moved from 64.8% in 2019 to 65.4% this year, which is a continuation of the steady growth pattern seen since 2016. This path is highlighted by the dashed red line in Figure 1.
The number of occupied houses or households rose to 126.9 million in the third quarter. That is a net increase of just 211,000 over a year ago. However, this increase obscures the fact that it is the result of a 2.7 million increase in renter households, while homeowner households fell by 2.4 million.
The growth trend for owners and renters since 2000 is shown in Figure 2. Each point in the chart reflects the total growth, either homeowners or renters, compared to the year 2000.
According to the chart, the number of homeowners today – in the third quarter of 2021 – is 15.8% higher than in the year 2000.
Renters though have increased much more rapidly. There are currently 28.7% more renters than in the year 2000, near double the gains for homeowners. This seems to go against everything that has been reported regarding the desire to own a single-family home.
This year’s decline could be the result of data collection issues mentioned earlier. The dotted line in Figure 2 shows the increase in the percentage of homeowners and renters from 2019 to this year, which may more accurately reflect the current situation. Homeowners have increased by nearly five percentage points over the last two years- from 11% in 2019 to this year’s 15.8%.
A similar situation is evident for homeownership by demographic groups. The data shows sharp increases last year with a fall in the latest quarter. However, ignoring last year’s jump, the rate increases for all ages as well as racial groups are shown in Figure 3. The numbers at the bottom of each bar reflect the change in rate from two years ago.
Among age groups, the rate has increased for all, with the curious exception of 55 to 64-year-olds, who fell.
Needless to say, despite the gains in homeownership among all demographic groups, it still lags behind the highs achieved in the early years of the 2000’s.
Charts:
