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Nation's homeownership rate drops to near 50-year low

The U.S. homeownership rate fell back to one of the lowest levels in 50 years this past first quarter, after posting gains for two consecutive quarters.

Homeownership stood at 63.5 percent on an unadjusted basis as of first-quarter 2016, down from 63.8 percent in fourth-quarter of 2015, the U.S. Census Bureau reported on Thursday.

The rate this past first quarter was lower than the first quarter of 2015 (63.7 percent), and at the lowest level since second-quarter 2015, when it fell to a 48-year low of 63.4 percent.

The homeownership rates for blacks and Hispanics registered even steeper quarterly declines, Census data shows.

The homeownership rate for blacks fell to 41.5 percent in the first quarter of this year, down from 41.9 percent as of fourth-quarter 2015. The Hispanic homeownership rate fell to 45.3 percent this past first quarter, down from 46.7 percent for the prior quarter.  

A perplexing statistic

Assessing the significance of the homeownership rate is challenging, however. The rate is influenced by demographic trends and population growth, as well as market trends. The long-term, 20-year trend lines looks like a bell curve. Homeownership steadily rose through the 1990s and began to fall just before the last housing-market peak prior to the recession. It has fallen steadily since then, other than the short-term bounce recorded for two quarters last year.

Also, it is not clear what represents a healthy homeownership rate for the nation, given the experiences of the last bubble — although housing-market watchdogs have noted the disturbing low rates among blacks and Hispanics, and the wide gap between minorities and whites.

The National Association of Realtors (NAR) would like to see the overall homeownership rate climb between 65 to 70 percent, just below the peak level before the crash.

Recent home-sales data has generally been positive. NAR’s latest March survey of Realtors suggested, however, that the share of first-time homebuyers is running about 10 percentage points under the historic norm of around 40 percent.

 “It is just one quarter, but again it follows that long-term trend of what we have seen that, even though we have had outstanding job growth now for over two years, it is not translating into rising homeownership rates,” NAR spokesman Adam DeSanctis said. “That really comes back to what we have been saying for a while: It is hard for first-time buyers right now to enter the market, for young adults to buy homes.” 


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