‘Glimmer of Hope’ That Homeownership Rate Is on the Upswing – Real Time Economics

The homeownership rate has ticked up slightly, possibly because some of the 9 million owners who lost their homes to foreclosure, short sale or another distressed event could finally be returning to the market.
Justin Sullivan/Getty Images

The homeownership rate ticked up slightly in the fourth quarter, bolstering economists’ hopes that it may finally be hitting bottom.

The homeownership rate, not seasonally adjusted, ticked up slightly to 63.8% from 63.7% in the third quarter, according to estimates published Thursday by the Commerce Department. It is also up from a 48-year low of 63.4% in the second quarter.

“It is certainly a little glimmer of hope that we are hitting bottom,” said Ralph McLaughlin, chief economist at real-estate information company Trulia.

One reason the homeownership rate could be ticking up: Some of the 9 million owners who lost their homes to foreclosure, short sale or another distressed event could finally be returning to the market.

Mr. McLaughlin pointed to a significant improvement in the homeownership rate among people ages 35 to 44, who were among the worst hit during the foreclosure crisis. The homeownership rate among that group increased to 59.3% from 58.1%.

The quarterly estimates are viewed as not terribly reliable by some economists, but they see reason for optimism given that the homeownership rate has risen for two successive quarters.

Still, there are a number of reasons not to be too sanguine. The homeownership rate was still down slightly year-over-year, from 64%, not seasonally adjusted, in the fourth quarter of 2014. Seasonally adjusted it has improved more modestly from the bottom, increasing to 63.7% in the fourth quarter from 63.5% in the second quarter.

The rate at which new renter households are being formed has fallen off sharply. The number of renter households increased by just 300,000 year-over-year in the fourth quarter. In the third quarter, the number of renter households increased by 1.3 million.

Some 162,000 new owner households were formed between the fourth quarter of 2014 and 2015, up slightly from 123,000 new owner households in the third quarter.

The sharp rise in the number of renters in recent quarters helped to drive down the homeownership rate, which is measured as the percentage of households who own versus rent. If renter household formation is tapering off, that could also be helping to moderate declines in the homeownership rate.

Related reading: 

The Homeownership Rate is Near a 30-Year Low. Could it be Hitting Bottom?

Many Who Lost Homes to Foreclosure in Last Decade Won’t Return

U.S. New Home Sales Rise in December

U.S. Homeownership Rate Hits 48-Year Low

Home Prices Expand Along with Prices

 


 


for economic news and analysis

for central banking news and analysis


Get WSJ economic analysis delivered to your inbox:


Sign up for the Real Time Economics daily summary

If the article suppose to have a video or a photo gallery and it does not appear on your screen, please Click Here

28 January 2016 | 7:55 pm – Source: blogs.wsj.com

[ad_2]

Leave a Reply

Your email address will not be published.