The U.S. homeownership rate posted another increase, reaching 64.3 percent in the second quarter, up a tenth of a percentage point from the first quarter, the Commerce Department reported this week. The rate has increased 0.6 percentage points over the past year.
Younger Americans, specifically those under the age of 35, are behind most of the recent increases in the ownership rate. The homeownership rate of this younger buyer group increased to 36.5 percent in the second quarter, up 1.2 percentage points from a year earlier.
Despite the overall increase in the second quarter, the homeownership rate still remains far below its peak of 69.2 percent in late 2004.
Some economists are skeptical whether the homeownership rate will continue its recent climb. Sales of existing homes dropped 2.2 percent in June, and sales of newly built homes also dropped in June compared to the previous month, according to the National Association of REALTORS® and National Association of Home Builders. Low inventories of homes for-sale, higher home prices, and higher mortgage rates are all keeping an unseasonal lid on home sales this summer. Existing-home prices have surged 5.2 percent over the past year to a record high in June, NAR reports. The 30-year mortgage rate has increased more than half a percentage point since early January to 4.54 percent, according to Freddie Mac.
“Homeownership has bottomed out, but is likely to go more or less sideways for the foreseeable future,” Mark Zandi, economist of Moody’s Analytics, told The Wall Street Journal. “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.”