Based on trends early in 2018, more Americans want to be homeowners than renters. Despite a difficult housing market nationwide, America is seeing a stable homeownership rate of 64% in the first two quarters of the year and lower rate of renters.
Under normal circumstances, the rate of homeowners & renters both increase at once, but the number of renters has fallen four quarters in a row. According to the Census Bureau’s Housing Vacancy Survey, the rate of homeownership has been on an upward trend since a cycle low of 62.9% in the second quarter of 2016. Therefore, it appears that people are making the switch to homeownership!
Homeownership increased the most among all age groups under 55. In fact, the number of millennials who own a home increased a percentage point from one year ago. Millennials are having a difficult time becoming first time homeowners due to strong headwinds in the market. However, there is a slow but steady increase of people in this age group switching from renting to buying. When they start purchasing homes en masse, we will see a ripple in the market because they are such a large demographic.
In March, we saw home sales rise even though the supply crunch is getting worse. Sales of previously-owned homes rose 1.1% and the median price for homes sold was $250,400. And homes stayed on the market for an average of 30 days in March. Experts suggest that the market is starting to plateau and is unable to break out of the tight inventory issue.
Since the beginning of 2017, renter households have been on a steady average decline. In the first quarter of 2018, the number of renter households decreased 0.3 million from the previous quarter. Although we are seeing a steady upward trend of homeownership in the past couple years, the rate is still below the 25 year average of 66.3%.
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