Is the Homeownership Rate Stabilizing?

The U.S. homeownership rate rose a notch in the third quarter, with 66.1 percent of households owning a home – up from 66.0 percent in the prior quarter. However, the trend has clearly been downward since the bubble situation of several years ago. Just maybe, however, we’re starting to venture into sustainable homeownership, since the current ownership rate matches up with 1998 levels. Back in 1998, there was no mention of a housing bubble or unsustainability in the media or in the academic literature, so the current homeownership figures may indeed indicate the right stabilizing level for the country. Other housing data have also pointed to stabilization (though not a genuine recovery) in recent months – such as home prices, home sales, and housing starts.

If the homeownership rate stabilizes at the current 66 percent or so level then the natural increases in population (3 million a year) and households (about 1.1 million a year during normal times) in the U.S. will bring about 700,000 additional homeowners each year. Total home sales and business opportunities for REALTORS® would arise from these new set of homeowners. Not to mention the added turnover rate among the existing 75 million home owning families, which was exceptionally low in recent years, due in part both to the weak economy and to the many underwater homeowners who have been unable to move without a short-sale approval from the banks.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

More Posts

Comments
  1. Your theory is solid. In order for the homeownership rate to stay level we would need job growth for the the households to purchase homes right? Anything promising on the Employment situation?

  2. Jon

    I think/hope that first-time homebuyers are starting gain confidence that the worst of our troubles are over and now is a good time to buy a first home. /with 30 year mortgage rates at 4% and and real estate prices much more affordable than they were 4-5 years ago, it is a great time to buy and afforda a first house.

  3. Jon

    I think/hope that first-time home buyers are starting gain confidence that the worst of our troubles are over and now is a good time get in the market and buy a first home. /with 30 year mortgage rates at 4% and and real estate prices much more affordable than they were 4-5 years ago, it is a great time to buy and afforda a first house.

  4. Why is 1998 the benchmark year for this analysis? Looking at the graph, I would think 1985-1995 is a more stable period and would represent the norm. What happened after 1995 that resulted in the large increase in home ownership prior to the bubble?

  5. Considering there’s a large number of people 60 days plus late on their mortgage, this number is clearly coming down once banks decide to work through the backlog or once the settlement over robo-signing occurs. This large pile of homeowners will not be elligible under current rules to repurchase immediately.

  6. Lynn Shepodd

    So, if 2004 69% of us owned homes. Now 66% of us own homes, and all the utter chaos and devastation we’ve been in has only caused a 3% drop in home ownership?