Economists' Commentary: Households and Home Ownership Rates in the U.S.
February 4, 2010
Danielle Hale, Research Economist 
The Home Ownership Rate
The home ownership rate released this week by the Census Bureau as part of the Current Population/Housing Vacancy Survey showed that 67.2 percent of Americans owned their homes at the end of 2009. This is a statistically significant decline from the third quarter of 2009, but not statistically different from the rate at the end of 2008. The graph below shows the home ownership rate over the past 10 years. The rate increased in the first half of the decade, peaking in 2004 and holding through 2005. In 2006, the rate began a decline that has largely stabilized in 2009. From its peak in 2004 of 69.2, to its current 67.2 percent the rate declined by 2 percentage points.
More Home Owner Households Today than in 2004
Based on that information, you may be surprised to hear that in at the end of 2009, there were actually more home owning households than there were in 2004. Population growth leads to increasing households. Based on the interaction between the home ownership rate and number of households, the number of home owning households actually peaked in. After a drop-off in 2007, the number of home owning households has been roughly steady.
Growth in Housing Units, Households, and the Number of Home Owners
The survey also provides information on the housing stock that is used to examine changing vacancy rates. The housing stock has grown fairly steadily over the last decade. The number of households has grown slightly less steadily. If we focus on growth rates in households and housing units, as in the chart below, the picture is clearer.
The year over year growth rate in households has fluctuated between 0.1 and 1.9 percent while the year over year growth rate in housing units has varied only between 0.9 and 1.5 percent. Looking at the start of the recession in December 2007, we see that growth rates in both households and housing units began to fall prior to the recession and continued to decline into 2008. The growth in households was variable but generally higher in 2009 than in 2008. The growth rate of housing units stabilized in mid-2008 at a lower level than any other time throughout the decade as builders cut back due to diminished demand and lower prices.
Demographic Factors Drive Changes in the Growth of Households and Home Owners
What drives changes in the number of households? Changes in the number of households are largely based on population changes. There is some adjustment at the margin for children who delay leaving their parents' home to establish their own household or single-householders who decide to have a roommate during more difficult economic times, but these impacts are small in comparison to bigger population trends. The recession will have a more lasting impact on households if reduced opportunity prevents immigration to the United States.
Owner and Renter Occupied Households
What drives changes in the number of renters and owners among households? In the housing crisis and recession, we've seen that financial pressure and unemployment can result in homeowners leaving or losing their homes. More recently, we've seen a surge in the number of home buyers, especially first-time buyers, responding to low prices, favorable mortgage rates, and a home buyer tax credit. While economic and financial conditions clearly factor into a buyer's decision, the National Association of Realtors' Profile of Home Buyers and Sellers has consistently shown that the largest share of first-time buyers, 40 percent in 2009, make a home purchase because the buyer is ready. The same profile has shown that each year since 2003, the typical first-time buyer has been 30, 31, or 32 years old. The good news for the housing industry is that the children of the baby-boomers, the so-called echo-boom, will be reaching that age soon. More than 20 million individuals are expected to be in the 30-34 age group by 20151.
More Surveys on Home Ownership - Diving into the Details
There are three separate surveys that keep track of the information needed to figure out the home ownership rate in the United States. The American Community Survey, the American Housing Survey, and the Current Population/Housing Vacancy Survey all track the number of occupied housing units and whether those units are owner or renter occupied or vacant. Unlike the 2010 Census, these surveys do not question the entire population but rather only a sample. As a result, they are subject to sample error which can be calculated. Additional sources of error are coverage, measurement, and non-response error. The end result of the various sources of error is that the measurements from the three surveys can vary slightly, but each provides useful insight into the housing market.
The most frequent of the surveys, the Current Population/Housing Vacancy Survey is a quarterly survey. The latest installment was released this week and provides counts of the number of households in the United States as well as the number of housing units and their use. With additional demographic information that is collected, the survey provides a snapshot of trends in population, home ownership rates by demographic and location characteristics, and vacancy rates by area and region. This article examined some top level information from the survey. You can dig further into the details by visiting the Census website and checking back with www.realtor.org/research.
- For more information on demographic drivers, see the Joint Center for Housing Studies 2009 Report.
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