Homeowership Rates Remain Stable in United States: Report

A home available 'For Sale' is shown in Austin, Texas, on Oct. 16, 2023. Brandon Bell/Getty Images

The rate of homeownership in the United States remained steady in the third quarter of this year while the rate of vacancy crept up, according to real estate listings website Realtor.

In the third quarter, the homeownership rate came in at 65.6 percent, “the same percentage as last quarter and only marginally lower than the third quarter of last year at 66.0 percent,” according to a Nov. 1 report from Realtor. The rates of both homeowner and rental vacancies grew in the third quarter. The rental vacancy rate is the percentage of rental property units that remain unused, while homeowner vacancy is the percentage of empty houses in a region put up for sale.

These metrics are known to have an influence over each other and provide information for investors to assess the value of properties and housing market conditions. Low vacancy rates usually indicate that people want to live in a particular building or region. Higher rates suggest the opposite: People have little to no interest.

The homeowner vacancy rate was 1 percent in the third quarter, up from 0.8 percent in the same quarter last year. This figure “has been on a consistent decline since 2011 and has stayed at or below 1.0 percent since 2020 Q2 [second quarter], even as for-sale inventory has grown post-pandemic,” according to the report.

The rental vacancy rate grew to 6.9 percent, the highest since the first quarter of 2019. If the rate were to move up, it could further strengthen declining trends seen in median asking rents and multifamily construction starts, according to Realtor.

The report pointed out that the homeownership rate peaked in the fourth quarter of 2004, falling thereafter and bottoming out in 2016. It then grew in the following years, peaking in the second quarter of 2020, during the COVID-19 pandemic.

“Since the fourth quarter of 2020, the homeownership rate has hovered between 65.4 percent and 66.0 percent, a significantly lower rate than before the Great Recession,” it reads.

“With housing inventory back to early 2020 levels, first-time homebuyers should have plenty of options, but they continue to face the challenges of affordability as listings prices have remained stubbornly high and mortgage rates have swung back up above 6.7 percent.”

A May report by the Federal Reserve found that a majority of American adults owned their homes last year. However, ownership rates varied depending on income.

Thirty-six percent of adults with incomes of less than $50,000 owned their homes, compared with 87 percent of adults with family incomes of $100,000 or more.

“Those who rent their homes, rather than own, most often said they did so because of financial constraints. That said, many renters noted that renting was more convenient than owning,” the report reads.

Millions of Vacant Homes

According to an Oct. 7 report by LendingTree, there were more than 5.6 million empty housing units across the largest 50 metropolitan areas in the United States last year. The vacancy rate was 7.37 percent, up slightly from the previous year.

“Nearly half of all vacant units in the nation’s 50 largest metros sit empty because they’re waiting to be rented or they’re only used part of the year,” the report reads.

New Orleans had the highest vacancy rate among metros, at 14.50 percent, followed by the Florida metros of Miami and Tampa, both of which had rates in excess of 11 percent. Nearly 600,000 housing units were empty in these three metros combined.

However, the fact that millions of homes are sitting vacant across the nation’s 50 largest metros “doesn’t mean that the U.S. has an overabundance of housing,” LendingTree senior economist Jacob Channel said, according to an Oct. 9 report by Realtor.

A key reason why properties remain empty was that owners were offering them for rent. Another factor is that some of these properties are used for seasonal, recreational, or other purposes.

“A house can be considered vacant even if it’s only empty for a relatively short time, like if it’s a vacation home not being used,” Channel said.

Homes could also be vacant because of personal reasons tied to the owner. For instance, an owner could be deciding what to do with the property—whether to sell it, rent it, or maintain it as is.

“Given the reasons why homes tend to sit vacant—and that vacancies tend to only be temporary—there isn’t much reason to conclude that the nation’s housing supply is anything but insufficient in the face of homebuyer and renter demand,” Channel said.