* Homeownership rate lowest since fourth-quarter 1995
* Rental vacancy rate slips, off 2009 peak of 11.1 percent
* Homeowner vacancy rate climbs to 2.1 percent
By Lucia Mutikani
WASHINGTON, April 30 Homeownership in the United
States hit a 17-year low in the first quarter as more Americans
opted to rent, continuing a trend exacerbated by the collapse of
the housing bubble.
The seasonally adjusted homeownership rate slipped to 65.2
percent, the lowest since the fourth quarter of 1995, the
Commerce Department said on Tuesday. The rate, which peaked at
69.4 percent in 2004, was 65.3 percent in the fourth quarter.
Economists said homeownership could decline even further
given that about 10.4 million homeowners owe more on their
mortgages than their homes are worth and credit is still tight.
"It's probably going to drop another point or two over the
next three years because there are still a lot of foreclosures.
More people are going to become renters going forward," said
Patrick Newport, an economist at IHS Global Insight in
The 2007-2009 recession, sparked by the collapse of the U.S.
housing market, has left the economy with deep scars that will
take long to heal. Though the recovery is now in its fourth
year, it has been too sluggish to foster faster job growth.
The unemployment rate is at an uncomfortably high 7.6
percent and about 21.6 million people are either unemployed,
working only part-time although wanting full-time work, or want
a job but have given up the search.
With so much slack in the labor market, income growth has
been sluggish, contributing to a weak underlying backdrop for
home purchase demand.
The rental market has tightened as more people have given up
on the Americans dream of owning a home.
In the first quarter, the residential rental vacancy rate
eased to 8.6 percent from 8.7 percent in the last three months
of 2012. It has dropped from a peak of 11.1 percent in 2009.
The low ownership rate provides fresh evidence that a
decisive turnaround in home sales has been driven by investors,
who are snapping up properties to rent out.
RENTING MORE APPEALING
"It's the same story of people choosing to rent versus
owning a home," said Yelena Shulyatyeva, an economist at BNP
Paribas in New York. "So far in the recovery home sales have
been supported by investors and what happens if they go away?"
Last week, the National Association of Realtors said
investors accounted for about a fifth of sales of previously
owned homes in March, with cash sales accounting for just under
a third of all transactions.
The related demand has led to a dwindling stock of houses on
the market and sent selling prices higher. A report on Tuesday
showed single-family home prices recorded their largest gain in
February in almost seven years.
The Commerce Department report showed the median price home
sellers sought in the first quarter was the highest in two
years, while the median rent slipped a bit.
Economists said the shift in ownership meant rentals would
continue to drive the housing market recovery in the near-term.
"We will see more multifamily units built and fewer single
family units," said Newport.
That would imply housing would offer less of a boost to the
economy than it would if purchase demand was stronger, partly
because the multifamily segment of the market is considerably
"For the housing story to be happily ever after, you need a
pick-up in genuine demand, but unfortunately people are still
choosing to rent," said Shulyatyeva.
In the first quarter, homeownership fell across all age
groups, but remained high among people 65 years and older. The
decline was most pronounced in the 45-54 age group, where the
ownership rate fell 0.8 percentage point.
Ownership among people between 55 and 64 years fell 0.6
percentage point in the first quarter.