WASHINGTON (Reuters) - The share of vacant U.S. homes rose to a record level in the first quarter, the government reported on Monday, with homeowners finding it increasingly difficult to find buyers in a collapsed market and more homes in foreclosure.
The percentage of owner-occupied homes now sitting empty rose to 2.9 percent in the January-to-March period, the third quarter in a row in which the vacancy rate increased, according to data released by the U.S. Census Bureau.
In the final quarter of last year, the share of vacant non-rental housing stood at 2.8 percent, a level hit for the first time a year ago. However, officials at Census called the latest increase “statistically insignificant.”
Still, the total number of vacant U.S. properties hit 18.6 million, which was a record, a Census official said.
Analysts attributed the rising vacancy rate to a surge in foreclosures brought on by the subprime mortgage crisis. They predicted there will be few signs of improvement until the end of this year or early in 2009, when the glut in home inventories is expected to stabilize.
“The problem right now with this vacancy is there are so many homes in foreclosure,” said Mark Zandi, chief economist with Moody’s Economy.Com in West Chester, Pennsylvania.
The drop in home values nationwide has pushed many borrowers toward foreclosure and upset lending standards in many markets. Many analysts believe home prices will not rebound until 2010.
According to data last week from the National Association of Realtors (NAR), 18 percent of previously owned homes that are for sale have negative equity and are either in foreclosure proceedings or headed for a “short sale” in which the lender will write off some of the original loan amount.
“This has been a frustration of our members,” the real estate trade group’s chief economist, Lawrence Yun, said last week. “Lenders have been dragging their feet” in approving short sales.
In March, the inventory of previously owned homes available for sale rose 1 percent to a 9.9 months’ supply at the current sales pace, the latest NAR data showed.
“Things will get worse before they will get better,” said Kurt Karl, chief economist at Swiss Re in New York.
At the same time, the U.S. homeownership rate moved up to a seasonally adjusted 67.9 percent from a near seven-year-low of 67.7 percent in the fourth quarter and 68.5 percent in the first quarter of 2007, according to the Census data.
Regionally, homeowner vacancy rates for the first three months of this year were the lowest in the Northeast, hitting 2 percent compared with 1.9 percent the same time a year earlier.
Homeowner vacancy rates were unchanged from the same time a year ago in both the Midwest and the South, at 2.9 percent and 3.2 percent, respectively. But they shot up to 3.2 percent in the West, the area hardest hit by the crisis in risky subprime mortgages, from 2.6 percent a year earlier.
Additional reporting by Tim Ahmann; Editing by Jonathan Oatis