U.S. Homeownership Falls Again; Household Formations Surge
Digested from “U.S. Homeownership Hits 20-Year Low, but New Households Growing”
Reuters (1/29/15) Mutikani, Lucia
The apartment industry received a double dose of positive news last week when the U.S. Home ownership rate fell to a 20-year low and household formations more than quadrupled in Q4 compared to the year-ago numbers.
The seasonally adjusted home ownership rate fell to 63.9 percent, its lowest level since Q3 1994. The mark has been consistently trending lower in recent years from its 2004 peak of 69.4 percent. It was 64.3 percent in Q3 2014.
Perhaps more impressive for apartment developers seeking to fill their new developments was the hike in household formations, which came in at 1.7 million in Q4 from only 356,000 in the same period in 2013.
While the gains were driven by renter households, that should provide a boost to home building.
A strengthening labor market is helping spur household formation, and the government is taking steps to ease credit requirements for first-time buyers. Housing has lagged an increases in the broader economy lately.