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Housing Vacancies on the Decline

As millennials continue to show up in the housing market, the national homeownership rate rose to its highest rate in six years, and the rental-vacancy rate dropped to its lowest level since mid-1985, according to the latest data from the Census Bureau [1], released Thursday. 

The homeownership rate stands at 65.1% as of Q4 2019, which is nearly unchanged from the 64.8% reported both in the previous quarter and a year earlier. 

About 1.3 million new homeowners entered the market in 2019, according to the Census data. 

Homeownership is growing [2] among millennials as well as African-American and Hispanic households, according to Frank Nothaft, Chief Economist for CoreLogic. 

The youngest homebuyers, those between 25 and 34 years of age, experienced a bump in the homeownership rate in Q4—rising from 36.5% to 37.6%. 

Millennials outnumber the tail-end of the Generation X cohort, and thus do more than offset the dip in ownership by 35-44-year-olds,” Nothaft said. The homeownership rate for the 35-44-year-old group fell slightly from 61.1% to 60.4% over the year. 

While millennials are continuing to enter the housing market, they still own just a small fraction of real estate in terms of value. In 2019, millennials owned 4% of all real estate value in the nation, according to a recent article in [3]MReport. This compares to Baby Boomers owning almost one-third of American real estate in terms of value in 1990. 

The article did point out that the average millennial age is 31, compared to the average Baby Boomer age of 35 in 1990, but as millennials reach an average age of 35, they are unlikely to make up that large of a gap in real estate value. 

Both black and Hispanic homeownership rose at least one percentage point over the year in Q4, reaching 44% and 48.1%, respectively, according to the Census Bureau. 

Recent data has also illustrated that women are making up a large share of home-owning Americans. In fact, single women homeowners [4] own more than 1.5 million more homes than single men in the nation’s largest metros, according to data from Lending Tree. 

While homeownership is moving in an upward direction, rental vacancies are on the decline—both for single-family properties and for multifamily properties. The overall rental vacancy rate is 6.4% as of Q4 2019. The rate has not been this low since mid-1984. 

Rental vacancies are down 0.4 percentage points from Q3 2019 but are similar to the rate reported a year ago. 

About 5.2% of single-family rental homes are vacant, while 7.4% of multi-family homes are vacant, as of Q4 2019. 

As rental vacancies trend lower, rental prices trend higher. Single-family rental prices [5], in particular, rose 3.1% over the year as of October, according to the latest Single-Family Rent Index from CoreLogic. The price rise was most prominent at the bottom of the market, where prices increased 3.6% over the year. 

Rental vacancies were highest in the South at 8.2% and lowest in the West at 4.4%, according to the Census data. The rental vacancy rate in the Midwest was 6.8%, and it was 5.2% in the Northeast. 

The homeowner vacancy rate in Q4 was 1.4%, unchanged from the previous quarter and a year ago.