The nation’s homeownership rate during the second quarter was 65.8%, the U.S. Census Bureau reported.
That’s a minimal increase on both a yearly and quarterly basis. It’s up from the 65.4% rate in both second-quarter 2021 and first-quarter 2022. The current homeownership rate is down from the pandemic-era peak of 67.9% reached in Q2 2020. Affordability issues from escalating mortgage rates and elevated home prices have helped cool the previously scorching housing market, bringing both existing- and new-home sales down in recent months.
Still, it’s worth noting that the homeownership rate during the second quarter was actually higher than it has been during the previous five quarters. This suggests that some potential buyers are staying resolute in their house hunting and finding ways to achieve their homeownership dreams despite mounting headwinds. Odeta Kushi, deputy chief economist at First American Financial Corp., pointed out that the recent homeownership growth is tied to young millennials and Gen Zers making their first (or possibly second) home purchases.
“It’s important to note that the estimates of year-over-year change for the second quarter of 2022 compare back to the second quarter of 2021, when restrictions on in-person data collection were still in place for a few areas,” Kushi said. “In the second quarter of 2021, pandemic-related restrictions on data collection affected 1% of sample cases and the response rate was 78%.
“With that said, when breaking down homeownership rate growth by age group, younger households were driving homeownership growth. In the second quarter of 2022, the homeownership rate for households under 35 years old increased by 1.3 percentage points on a year-over-year basis.”
This increase was less steep when comparing Q2 2022 to Q4 2021, when COVID-related restrictions on data collection had subsided. During this time, the homeownership rate for households under 35 was up 0.8 percentage points — still comparing favorably to households headed by someone 35 to 44 years old, which saw an increase of 0.5 percentage points. The homeownership rate for households under age 35 is now at 39.1% after seeing an uptick for the third consecutive quarter.
Ongoing affordability woes may throw a wrench into this trajectory, Kushi said, but added that young buyers are still the engine behind homeownership growth moving forward.
“Declining affordability may temper millennial homeownership demand in 2022,” she said. “Nevertheless, the lifestyle choices that highly correlate with homeownership will persist. Buying a home is both a financial and a lifestyle decision. Despite growing affordability headwinds, millennials continue to transition into their prime homebuying age and will remain the driving force in potential homeownership demand in the years ahead.”