The U.S. homeownership rate fell to the lowest in more than 50 years as rising prices put buying out of reach for many renters.
The share of Americans who own their homes was 62.9 percent in the second quarter, the lowest since 1965, according to a Census Bureau report Thursday. It was the second straight quarterly decrease, down from 63.5 percent in the previous three months.
The drop extends a years-long decline from the last housing boom, in part because of tight credit and a shift toward renting in the aftermath of the crash. First-time buyers have been struggling to find affordable properties as low mortgage rates and an improving job market spur competition for a tight supply of listings. Home prices rose 5.2 percent in May from a year earlier, according to the S&P CoreLogic Case-Shiller index of values in 20 cities released this week.
“One of the biggest hurdles now is affordability,” Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the Census Bureau report was released. “Home prices are rising so much faster than incomes, so it’s hard for buyers to save for a down payment.”
The homeownership rate reached a peak of 69.2 percent in June 2004.
The decline may be the result of young people leaving parents’ homes and entering the rental market, which dilutes the number of owner-occupant households, said Ralph McLaughlin, chief economist for data provider Trulia. He said the change from a year earlier, when the rate was 63.4 percent, isn’t statistically significant because of the margin of error of 0.5 percentage points.
“The drop in the homeownership rate this quarter to historical lows isn’t necessarily a bad sign,” McLaughlin said in an e-mail. “This is because renter households are growing at a much faster rate than owner households, reflecting growing confidence of those who were most likely impacted by the foreclosure crisis. Still, low inventory and affordability plagues those who do want to buy a home.”
The homeownership rate for Americans ages 18-34 fell to 34.1 percent in the second quarter from 34.8 percent a year earlier, the Census Bureau said. The decline is within the margin of error for that age group of 0.8 percentage points.