The homeownership rate fell to its lowest point in 20 years and the housing market continued to tighten in 2014, according to the Census Bureau’s fourth quarter Housing Vacancy Survey (HVS) data released on January 29, and the annual HVS data released on February 23.
The homeownership rate has been in decline since its high of 69.2% in the fourth quarter of 2004. As of the fourth quarter of 2014 it was at 64%, the lowest it has been since the third quarter of 1994 when it was 64.1%. Homeownership rates for African Americans have fallen from 49.7% in the second quarter of 2004 to 42.1% in the fourth quarter of 2014. Hispanic households have also experienced declines in homeownership rates over the past few years, but have not returned to mid-90s rates.
The rate of homeownership is highest for householders who are 65 years of age and above (79.5%) and lowest for householders under 35 years old (35.3%). The homeownership rate for the 65 and above age group has held relatively steady since 2008, while rate for the under 35 group has dropped from a high of 41.3% in the first quarter of 2008.
Rental vacancy rates also continue to decline, with the 2014 fourth quarter rental housing vacancy rate at 7.0%, 1.2 percentage points lower than the fourth quarter rate in 2013 and 3.7 percentage points lower than the fourth quarter rate of 2009.
There is considerable variation in homeowner and rental vacancy rates by metropolitan status and geographic region, but rates have declined in all areas from 2013. For urban areas, or principal cities, homeowner vacancy was 2.1% in 2014 while rental vacancy was 7.5%. Suburbs had the lowest vacancy rates, with the homeowner vacancy rate at 1.7% in 2014 and the rental vacancy rate at 7.2%. The homeowner vacancy rate in rural areas, or areas outside a Metropolitan Statistical Area (MSA), was 2.1% in 2014, and the rental vacancy rate was 8.9%.
The South had the highest vacancy rates for both homeowners (2.2%) and for rentals (9.5%) in 2014, while the West had the lowest vacancy rates for homeowners (1.6%) and for rentals (5.6%). Across all regions, the housing market for rental units continued to tighten as vacancy rates showed a statistically significant decrease from 2013.
The HVS also provides important data on household formation. It shows a dramatic increase of more than 1.6 million households from the fourth quarter of 2013 to the fourth quarter of 2014. This is a much larger increase than the year-over-year growth shown in previous quarters, which averaged less than 600,000 for the past five years. According to the Joint Center for Housing Studies at Harvard University, this is in line with other market indicators that suggest that household growth has been increasing at a faster pace than shown in previous HVSs.
HVS data are at http://www.census.gov/housing/hvs
A February 19 analysis of the HVS data from the Harvard Joint Center for Housing Studies is at http://housingperspectives.blogspot.com