While a change to the Census Bureau’s survey process may have affected the results, young adults and minorities still showed striking increases in ownership.
The U.S. homeownership rate surged to its highest level in 12 years in the second quarter as low mortgage rates and the pandemic prompt more Americans to want to have a home.
The homeownership rate rose to 67.9% in the second quarter, increasing even while the nation faced record levels of unemployment, the Census Bureau reported this week. A year ago, the homeownership rate was 64.1%, for comparison.
However, the Census Bureau cautioned that the data collection methods for the most recent quarter’s report may have affected the results. Due to the pandemic, researchers were unable to go door-to-door and conduct in-person interviews to verify information, but had to rely on the telephone.
Still, the results show young adults and minorities increasingly turned to homeownership in the second quarter.
The homeownership rate in the second quarter increased the most among those under the age of 35, increasing to 40.6%, compared to 37.3% the prior quarter.
The homeownership rate in the second quarter showed increases among all age groups.
The homeownership rate among Black Americans increased to 47%, the highest since 2008, according to the report. A year prior, the homeownership rate for Black households had fallen to its lowest rate on record.
The homeownership rate among Hispanics also posted an increase, reaching 51.4% in the second quarter, the highest since data going back to 1994, the Census Bureau reported.
The increase in the overall homeownership rate in the second quarter places it back to a level last seen before the housing crisis and the widespread foreclosures that followed the 2008 foreclosure crisis, Lawrence Yun, chief economist of the National Association of REALTORS®, told HousingWire.
“Usually, homeownership data moves at more of a glacier-slow pace, so to see a sudden move like this was quite surprising,” Yun says. “Some of this increase could be due to the change in data measurement.”
The Census Bureau noted that its change in collecting data due to the pandemic caused the survey’s response rate to be 12 percentage points lower in the second quarter compared to the first quarter.
Lower mortgage rates are also enticing more Americans to lay down some roots during the pandemic. Yun told HousingWire that lenders qualify applicants by the amount of the monthly payment measured against their income. When financing costs move lower, the payment shrinks.
“Record-low mortgage rates in mid-2020 will provide a further boost to homebuilding, and it could be that families are more interested in homeownership because of the pandemic,” PNC Financial Services said in a research note last week.
In mid-July, the 30-year fixed-rate mortgage dipped below 3% for the first time, Freddie Mac reported.
Source: REALTOR® Magazine