A recent article published by the National Association of Home Builders(NAHB) indicates the millennials continue to increase the ranks of home ownership. According to the Census Bureau’s Housing Vacancy Survey (HVS), the millennial homeownership rate has increased to 37% nationally. While this rise is gradual (up 1.2% over last year) it is important to note that this was the highest age group to see an increase in homeownership among all age groups tracked.
This trend in millennial homeownership may be gaining traction as a result of the recent slowing in price appreciation. Running rampant over the last few years, price increases have begun pulling back. We believe slowing prices will continue to influence the drag on housing supply as more buyers enter the market. This under-supply will continue to be impacted as new housing starts remain below the historic average.
Another indicator of sales activity is the increase in household formation, with homeowner households rising faster than renter households. “In the third quarter 2018, the number of homeowners increased by 1.5 million, while the number of renter households rose by 60,000.” That’s quite a shift, further evidenced by the fact that the national rental vacancy factor has risen to 7.1%.
What’s the future look like? With the peak of homeownership recorded at 69.2% in 2004, the most recently reported level of 64.4% (3rd quarter 2018) indicates there is room to grow. Add to that, the increase in household formation and we believe the housing shortage will continue to be an issue. We’ll continue to address our quest to provide the foundation for attainable housing options for millennials.