The U.S. homeownership rate fell to the lowest level in more than two decades, extending a multiyear decline as rising prices and stagnant wages keep young families out of the property-buying market.
The share of Americans who own their homes was 63.7 percent in the first quarter, down from 64 percent in the prior three months, the Census Bureau said in a report Tuesday. The rate was the lowest since 1993, data compiled by Bloomberg show.
Entry-level buyers are struggling to save enough money to purchase homes as gains in U.S. real estate prices outstrip increases in wages, while mortgage lending remains tight. The median household income in March grew 2.1 percent from a year earlier while the median home price gained 7.8 percent in the same period. Last year, the share of home purchases by first-time buyers fell to the lowest level in almost three decades, according to the National Association of Realtors.
“The No. 1 issue in the housing market right now is wages,” said Jay Morelock, an economist with FTN Financial in New York. “For the housing recovery to be sustainable in the long run, we have to see wages increase at a faster pace.”
As homeownership falls, demand for rental housing is booming. The vacancy rate for rented homes in the U.S. fell to 7.1 percent in the first quarter from 8.3 percent a year earlier, the Census Bureau report showed. It was the lowest first-quarter rate since 1986. The median monthly asking rent was a record $799, according to the agency.
The number of renter-occupied units increased by almost 1.9 million from a year earlier, the census data showed, indicating growth in household formations. Owner-occupied housing decreased by 386,000.
The median U.S. household income in March was $54,203, according to Sentier Research LLC in Annapolis, Maryland. When adjusted for inflation, that’s 5.3 percent lower than January 2008, the beginning of the economic downturn, said Gordon Green, a Sentier partner who formerly directed the Census Bureau office that compiles wage statistics.
“Although the economic recovery officially began in June 2009, the recovery in household income didn’t begin to emerge until after August 2011,” Green said in an April 23 report.
The median household income has gained 5.5 percent since reaching that bottom, Sentier’s data show. Home prices have increased 24 percent in the same period, according to the National Association of Realtors.