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Homeownership rates rise from 50-year low

WASHINGTON – Oct. 31, 2016 – The U.S. homeownership rate rebounded slightly in the third quarter after plummeting to a 50-year low in the previous quarter. The Census Bureau reported last week that the homeownership rate rose to 63.5 percent in the July-September quarter.
Household formation increased, even though the rate is still lower year-to-year and significantly off its peak of 69.2 percent peak during the housing boom. In the third quarter, the U.S. gained more than 1.1 million households.
Household formation is the number of newly occupied housing units, which includes both rented and owned. Most of the recent uptick in household formation has been attributed to the renter side. Just under half of the new households formed in the third quarter were from homeowners.
“Though the majority of household formation is still renters, the owner-occupied share was at its highest level in a decade,” says Jed Kolko, chief economist at Indeed, an online job site. “Both the improving economy and the aging of millennials will give homeownership a boost.”
As millennials age into their 30s, they’re starting to form new households. They often opt to first rent before settling down and purchasing a home, say housing analysts. A survey conducted by Trulia this year shows 80 percent of millennials say they want to own a home, which is the highest share of any other generation.
But one pressing issue that could curtail the formation of new households: the shortage of homes for sale. Inventory levels continue to worsen.
The number of for-sale listings in October showed a sharper decline than usual in October, according to data. Supply is particularly low for less expensive, entry-level homes. The number of homes for-sale is 11 percent less than a year ago.
In addition, October’s inventory drop is the largest monthly inventory decrease since July 2015.
Source: “Homeownership Crawls Back Up From 50-Year Low,” CNBC (Oct. 27, 2016)
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Source: Florida Realtors Feed

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