U.S. homeownership added one-tenth of a percentage point during the second quarter of 2018, pushing the rate to 64.3% at the end of June 2018. Analysts credit young Americans—under 35 years old—for the slight bump in the homeownership rate. This is especially because this population’s ownership rate rose by 1.2% over the same time last year. While this is still below 2004’s peak rate of 69.2%, it’s a small improvement over the recent nadir of 63.7%. The only time in recent history the rate has been lower was in 1960 when 62.1% of Americans owned homes.
Analysts credit demand from millennials for the recent tick upward, describing the generation’s recent homebuying activity as “a home-shopping spree” (Aaron Terrazas, Zillow). However, note some, homeownership rates for black and Hispanic households fell during Q2 2018. However, Asian, Native Hawaiian, and Pacific Islander homeownership rates rose during the same period.
Slightly older homeowners—between 35 and 44 years of age—also experienced gains during Q2. In fact, that group added 0.2% over the course of Q2 and more than 1% over the past year. Ages 45-54 also gained, adding 0.6% over Q2 and 1.3% over the past year.
Homeownership Rates Could Even Out Now
Analysts agree that rising homeownership rates are a good thing. But most also agree the current lack of national inventory and still-rising home values will likely cause this measure to “go more or less sideways for the foreseeable future,” (Mark Zandi, Moody’s). He added, “Easing credit standards and a strong job market will support homeownership, but higher mortgage rates and the change in the tax law weigh on it.
Homebuilders are also feeling a little less optimistic despite these homeownership gains. Sales of existing homes dropped in June, and some builders report lower order volumes for Fall than expected.