The U.S. homeownership rate climbed in the second quarter, a signal that the sharp downward spiral that began after the housing crash is finally reversing.
The homeownership rate hit 63.7% in the second quarter, the Census Bureau said, a jump of nearly a full percentage point from a year ago, when it touched a 50-year low of 62.9%. The share of Americans who own homes has climbed steadily since then.
The homeownership rate also edged up from the first quarter, when it sat at 63.6%.
"The damage the [2007-09] great recession has done to the homeownership rate is likely reversing course," said Ralph McLaughlin, chief economist at home tracker Trulia.
The quarterly reports can be volatile, but several factors point to sustained improvement. The number of new-owner households exceeded new renter ones for the second consecutive quarter. Some 1.26 million new-owner households have been formed since the second quarter of 2016, while there are 702,000 fewer renter households than there were a year ago, according to the Census.
There are now more homeowners in the U.S. than any time since 2009, according to Svenja Gudell, chief economist at Zillow.
That doesn't bode well for apartment landlords, who are battling a flood of new supply that is pushing vacancy rates up and keeping rent growth tepid in many parts of the country.
The national vacancy rate climbed to 4.4% for the quarter from 4.2% a year earlier, according to data provider Reis Inc.
"As the rental market becomes more saturated and vacancies keep climbing, there is some hope that builders may begin to re-focus their attention on the for-sale segment, a potential boon for those renters that likely want to buy, and would if they could, but haven't been able to find the right home for them given incredibly tight inventory," Ms. Gudell said.
Nonetheless, the trend is good news for the housing market and the U.S. economy overall, given the boost that new-home construction provides. Builders are likely to continue ramping up production of starter homes in response to increasing demand from millennials.
The homeownership rate for households headed by someone under 35 years old climbed to 35.3% in the second quarter, up from 34.1% a year earlier.
Increasing demand is likely to put additional upward pressure on home prices unless there is more supply to meet it. There is evidence that builders are beginning to step up. Housing starts rose 8.3% in June from the previous month to a seasonally adjusted annual rate of 1.215 million, the Commerce Department said last week.
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(END) Dow Jones Newswires
July 27, 2017 14:13 ET (18:13 GMT)