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Younger buyers drive homeownership rate in Q2 2022

Rental vacancy down 0.6 percentage points from a year ago

Despite rising home prices, rents and mortgage rates, nationwide, the homeownership rate was up and the rental vacancy rate was down during the second quarter of 2022 compared to a year prior, according to data released Tuesday by the U.S. Census Bureau.

During the second quarter, the homeownership rate rose to 65.8% from 65.4% a year prior, which the reports notes is not a statistically significant difference. Rental vacancy, on the other hand, did record a statistically significant change, falling to 5.6% from the 6.2% recorded during the second quarter of 2021.

The year-over-year increase rise in the homeownership rate was primarily driven by an increase in the homeownership rate of those under the age of 35. In Q2 2021, the homeownership rate for those under 35 years old was 37.8%, compared to 39.1% this year.

“When breaking down homeownership rate growth by age group, younger households were driving homeownership growth,” Odeta Kushi, First American’s deputy chief economist, said in a statement. “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.”

Overall, approximately 89.3% of housing units in the U.S. were occupied during the second quarter and 10.7% were vacant. Owner-occupied housing units made up 58.8% of all housing units and renter-occupied made up 30.6%, while 8.1% were recorded as vacant year-round and 2.5% were vacant for seasonal use. Out of all the housing units, 1.8% were vacant for rent, 0.5% were vacant for sale only and 0.8% were rented or sold, but not yet occupied.

When broken down by location, homeowner housing vacancy was not statistically different in principal cities versus outside MSAs, with rates of 1.1% and 0.9% respectively. In the suburbs, however, the homeowner vacancy rate was just 0.7%. A similar trend occurred in the rental vacancy rate, which was 6.7% and 5.8% in outside MSAs and principal cities, respectively, but 5.2% in the suburbs.

While respondents who identified as non-Hispanic white had the highest homeownership rate at 74.6%, the homeownership rate among Black respondents was the highest it has been since Q1 2021, coming in at 45.3%. Among Hispanics, the homeownership rate was 48.3% and among Asians, Native Hawaiians, and Pacific Islanders it was 61.1%.  

Regionally, the Midwest had the highest homeownership rate at 70.1%, followed by the South at 67.8%, the Northeast at 62.1% and the West at 60.9%. The South had the highest rental vacancy rate at 7.0%, followed by the Midwest at 6.6%, the West at 3.8% and the West at 4.3%.  

Reflecting the rise in homeownership during the second quarter, mortgage balances shown on consumer credit reports increased by $207 billion during the second quarter of 2022, standing at $11.39 trillion at the end of June, compared to the $10.44 trillion recorded a year ago, according to Federal Reserve Bank of New York.

“Declining affordability may temper millennial homeownership demand in 2022. Nevertheless, the lifestyle choices that highly correlate with homeownership will persist. Buying a home is both a financial and a lifestyle decision,” Kushi said in a statement. “Despite growing affordability headwinds, millennials continue to transition into their prime home-buying age and will remain the driving force in potential homeownership demand in the years ahead.”

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