What is the Homeownership Rate?

Understanding What This Calculation Means for Buyers and Sellers

multi-ethnic couple in home
••• Photo: Roberto Westbrook/Getty Images

Deciding to become a homeowner can be a simultaneously exciting and terrifying milestone. There are multiple moving parts and things to consider throughout the process. You have to save up thousands of dollars, pay down existing debt and improve your credit scores to show lenders you're a capable and responsible borrower, just to name a few tasks. 

But that doesn't stop a large share of U.S. consumers from biting off a slice of the American dream. The national homeownership rate currently sits at 64.3 percent, according to the most recent data from the U.S Census Bureau. The rates broken down by region are: 

  • Northeast: 61.3 percent 
  • Midwest: 68.3 percent 
  • South: 65.9 percent 
  • West: 59.7 percent 

Americans age 65 and older have the highest homeownership rate at 78 percent. Millennials—those 34 and younger—have the lowest rate at 36.5 percent, though this is a notable bump from Q1 2018, when the rate was 35.3 percent. The homeownership rates for 35- to 44-year-olds, 45- to 54-year-olds and 55- to 64-year-olds are 60 percent, 70.6 percent and 75.1 percent, respectively. 

How Is the Homeownership Rate Calculated?

The homeownership rate is the percentage of U.S. homes that are owner-occupied. The rate is calculated by dividing the number of homes that are owner-occupied by the total number of occupied households. The Census Bureau releases this data in its "Quarterly Residencies and Homeownership" report, which includes info about the state of homeownership overall, about a month after each quarter ends. 

Historically speaking, the homeownership rate has risen above the 50-year low it reached during the second quarter of 2016 when it clocked in at 62.9 percent. Still, it's several percentage points away from its pre-recession peak of 69.2 percent. 

What About the Homeowner Vacancy Rate? 

The homeowner vacancy rate is defined as the proportion of homeowner inventory that is vacant and for sale. For the second quarter of 2018, the national homeowner vacancy rate was 1.5 percent, which points to very low housing inventory available to potential homebuyers. 

Housing inventory affects demand—when there's low inventory, demand is higher. High demand means higher home prices. According to a Reuters analysis, home prices have been rising faster than wage growth and inflation, which weakens affordability for prospective homeowners. This trend isn't expected to slow down at least for the next year or so. Home prices jumped 6.2 percent year over year, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine Census divisions.

Another measure of housing inventory, the National Association of Realtors' existing-home sales report, indicates there are 4.3 months' worth of homes for sale. NAR says six months' worth of inventory is considered a balanced market for both buyers and sellers. 

“Rising interest rates along with high home prices and lack of inventory continues to push entry-level and first-time homebuyers out of the market,” says NAR chief economist Lawrence Yun. 

Mortgage interest rates have been steadily increasing over the last 12 months and are expected to continue their upward trajectory. As of Sept. 20, Freddie Mac's Primary Mortgage Market Survey reports the average 30-year fixed-rate mortgage is 4.65 percent. During the same week in 2017, the rate was 3.83 percent. 

Taking all of these statistics into consideration, home sellers seem to have the upper hand in the housing market. Buyers have to go the extra mile to stand out and have their home offers taken seriously. 

Where Can You Find More Data?

If you want to keep an eye on the national homeownership rate, visit the U.S. Census Bureau's website. The quarterly report also provides data on the homeownership rate by age group, race/ethnicity and region. Current and historical data can be found on the Census Housing Vacancies and Homeownership page. 

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