U.S. Homeownership

Data recently released by the Census Bureau reveals that the U.S. homeownership rate fell to 65.7% in the fourth quarter, down from the year before. The decline was very modest, the rate fell by just 0.3% keeping homeownership within the narrow band it has maintained over the last five years.

The homeownership rate has ranged in the last four years less than one percent, from a low 65.1%, in the fourth quarter of 2019, to the 2022 high of 65.9%. However, the gains made in homeownership between 2016 and 2020, when the rate rose by two percentage points, have stopped.

Further, as can be seen in the chart, the current rate is barely higher than what it was in 1980, when 65.5% of households owned their home. More than four decades of government policies have not made the American dream possible to a greater percentage of households.

But the latest drop in homeownership was not widespread across all age groups. Households headed by a 55 to 64 year-old saw their ownership rise by just under half a percent, 0.3% in fact, to  76%. This is the second highest rate among all ages, as can be seen in the left panel in the chart below.

The biggest decline in ownership was among the youngest households, that is those headed by persons 34 years or younger. Their homeownership rate fell by six-tenths of a percent (0.6%) to 62% in the fourth quarter. Yet this decline does not make a major dent on the gains effected in the five year period 2016-2020, when the homeownership among the youngest households had risen by 3.8%. The under 35 year-old households enjoyed the biggest gains among all age groups in that period.

 

The other groups with a drop in the homeownership rate were the 35 to 44 years, down by two-tenths of a percent (0.2%), and the 45 to 54 year olds, whose rate fell by three-tenths to 70.3%.

Back to the future

The earliest homeownership data by age group from the Census Bureau is available beginning in 1994, even though overall rate for all U.S. households is from 1964.  Based on the age of household data, the national homeownership rate has fluctuated from 64.2% in 1994 to 65.7% today, but rising as high as 69.2% in 2004 at the height of the housing boom/crash earlier this century. 

The 1.5% increase in homeownership over the last 19 years results from gains among the youngest and oldest households, compensated with losses among the middle age groups. Households headed by persons under 35 years rose by just 0.1%, but elder households 65 and over rose by 1.3%.

The homeownership rate among the other three age groups is lower today than in 1994. The 35 to 44 year olds is 2.7% lower, the 45 to 54 is 4.6% down, and the 55 to 64 group is down 3.2%.

Homeownership Among Race & Ethnic Groups

The Census Bureau also provides homeownership data for major race groups, including Hispanics. The left panel in the chart below displays the latest ownership rate for the various groups. White households, as is well known, have the highest rate with 73.8% of households owning their home. Although the rate fell last year by 0.7% it is 3.6% higher than its level back in 1994.

Asian households post the second highest rate, 63% of them owned their house at the end of last year, 1.1% higher than in 2022. Although data for Asian households had not been collected prior to 2016, since that year their homeownership has risen by 6.4%.

Hispanic- and Black-headed households have the lowest homeownership rates, with Hispanic latest rate of 49.8%, and that of Blacks almost four points lower at 45.9%. The homeownership for Hispanics and Blacks had been nearly equal until 2004 when both declined as a consequence of the housing collapse that started that year. But when the housing market began to improve around 2010, the homeownership among Hispanics recovered faster. 

Hispanic households' rate has risen 7.6% since 1994, while Black's have gained less than half, 3.3%.

Politics anyone?

 

Government policies naturally have an impact on housing and homeownership, often unfavorable despite the good intentions. Most dramatic, and damaging it turns out, were the policies enacted in the late 1990s and early 2000s aimed at bolstering homeownership, such as the Community Reinvestment Act. These policies combined with easier lending practices adopted by banks and mortgage companies, and encouraged by the government, led to what came to be known as the subprime mortgage crisis with dire consequences for millions of households who subsequently lost their home. 

For illustration purposes, the chart below displays the path of homeownership for the last thirty years, highlighting the president and his political party throughout this period. Without any deep analysis we can easily see that neither party's policies proved to be more beneficial or detrimental to homeownership than the other party.