NETL - Home Ownership Rate: 66% In Q3 2022

Summary

• The recent recession as a result of the COVID-19 global pandemic caused a massive, but brief, jump in homeownership due to grossly reduced spending.
• The Census Bureau has been tracking the non-seasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980.
• The consensus view is that trend away from homeownership is a result of rising residential real estate prices in general and limited supply of entry-level priced homes that would attract first-time buyers.

By Jill Mislinski

The Census Bureau has now released its latest quarterly report with data through Q3 2022. The seasonally adjusted rate for Q3 is 66 percent, mostly unchanged from Q2 2022. The non-seasonally adjusted Q2 number is also at 65.8 percent, up from the Q2 2022 figure. Over the last decade, the general trend has been consistent: The rate of homeownership continued to struggle. The recent recession as a result of the COVID-19 global pandemic caused a massive, but brief, jump in homeownership due to grossly reduced spending.

Here's an excerpt from the press release :

National vacancy rates in the third quarter 2022 were 6.0 percent for rental housing and 0.9 percent for homeowner housing. The rental vacancy rate was not statistically different from the rate in the third quarter 2021 (5.8 percent) and 0.4 percentage points higher than the rate in the second quarter 2022 (5.6 percent).

The homeowner vacancy rate of 0.9 percent was virtually the same as the rate in the third quarter 2021 (0.9 percent) and not statistically different from the rate in the second quarter 2022 (0.8 percent).

The homeownership rate of 66.0 percent was 0.6 percentage points higher than the rate in the third quarter 2021 (65.4 percent) and not statistically different from the rate in the second quarter 2022 (65.8 percent).

The Census Bureau has been tracking the non-seasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980. Here is a snapshot of the non-seasonally adjusted series with a 4-quarter moving average to highlight the trend.

The consensus view is that trend away from homeownership is a result of rising residential real estate prices in general and limited supply of entry-level priced homes that would attract first-time buyers.

Here is the YoY version of the chart going back to 1965.

For an interesting comparison to prices, here is an inflation-adjusted look at the S&P Case-Shiller Home Price Index.

Homeownership Rates in Other Countries

The snapshot below gives us a crude comparison of the US homeownership rate compared to some select other countries. Our data source is a subset of the over 70 countries in this Wikipedia entry on homeownership. We included the more populous outliers at the top and bottom, Vietnam at 90% (2020) and Switzerland at 41.6% (2019).

The underlying factors in the chart above are quite complex: Residential real estate affordability, financing options, household income distributions, demographics, and cultural values, to mention some of the more obvious.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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