January 30, 2017
Orion’s brokers recognize that not everyone will want to, or be able to, own a home. Although homeownership remains near historic lows, in the third quarter of 2016 homeownership rate rose slightly to 63.5 percent. And the news last week that the FHA has suspended its lowering of its insurance premium hopefully will not have a big impact.
But back to the numbers! Household growth in Q3 was driven by newly minted homeowner households. The number of owner households grew by 922,000, while the number of renter households fell by 606,000. It was the largest quarter-over-quarter increase in the number of owner households since Q3 2001, and the number of owner households is now at its highest level since Q4 2010.
Compared to a year ago, however, Orion’s brokers are seeing that renters are still driving household formation: The number of renter households is up by 628,000 (1.5 percent) since Q3 2015, while the number of owner households is up 561,000 (0.8 percent). We are seeing this at Orion.
We have also seen another trend: Hispanics were the only racial/ethnic group to experience an increase in homeownership in Q3 compared to last year. The Hispanic homeownership rate rose 0.9 percentage points compared to Q3 2015 (to 47 percent); the homeownership rate for non-Hispanic whites was flat at 71.9 percent. The homeownership rate fell 1.1 percentage points and 0.4 percentage points year-over-year for blacks and Asians, respectively (to 47 percent for blacks and 53.3 percent for Asians).
The homeownership rate continues to fall in the pricy, booming and supply-constrained West, falling 0.5 percentage points year-over-year in Q3 to 58.2 percent in Q3. Homeownership is also down year-over-year in the South, but was stable year-over-year in the Northeast, at 60.8 percent, and up 0.5 percentage point in the Midwest (68.6 percent).