The share of Americans who own their homes fell to the lowest level in almost five decades, extending a multiyear decline as families struggle to regain ground lost during the financial crisis and rentals gain favor.
The U.S. homeownership rate was 63.4 percent in the second quarter, down from 63.7 percent in the previous three months, the Census Bureau reported Tuesday. It was the lowest reading since 1967.
Would-be homebuyers have been held back by stringent mortgage standards and wage growth that hasn’t kept up with surging home prices. The average household income in June was 4 percent below a record high set in early 2008, even as unemployment dropped to its pre-recession rate, according to Sentier Research LLC.
“We’re still suffering the effects of the housing collapse and the financial crisis,” said Mark Vitner, senior economist with Wells Fargo Securities in Charlotte, North Carolina. “We may have another percentage point to go before we see a bottom” in the homeownership rate, he said.
Home values have jumped 34 percent since reaching a bottom in early 2012, making purchases more expensive for entry-level buyers. Prices in 20 U.S. cities climbed 4.9 percent in May from a year earlier, the S&P/Case-Shiller Index showed Tuesday.
Demand for rentals is growing, fueling a surge in multifamily construction and sending leasing costs soaring. The number of renter-occupied units increased by about 2 million in the second quarter from a year earlier, the Census Bureau report showed.
The rental vacancy rate fell to 6.8 percent from 7.1 percent in the first quarter and 7.5 percent a year earlier. It was the lowest rate since the 1980s, according to the report. The median asking rent was a record $803 a month.