November 5, 2019

A Shift in Quarterly Tenure Rates Mutes Recent Homeownership Declines

  • The national homeownership rate rose to 64.7 percent in the third quarter
  • Largest gains were among Black, low-income, and younger households
  • Long-term gains among Hispanic households also continue to buck wider trends

The latest installment of Enterprise’s Housing Tenure Trends report shows a noticeable uptick in the quarterly national homeownership rate, from 64.3 percent in Q2 to 64.7 percent last quarter on a seasonally adjusted basis. Though not statistically significant, this change nonetheless suggests the highest share of U.S. households owning their homes since the end of the 12-year downturn in homeownership rates in 2016. The share of households renting, meanwhile, declined to 35.3 percent.

These national level trends in housing tenure – i.e.  whether households own or rent their homes – offer one perspective on the state of the U.S. housing market. Yet, while broad increases in homeownership are generally seen as a positive indicator for housing and the economy, not all subsets of households by age, race, and income benefit equally from such gains. 

The Housing Tenure Report dives deeper into the tenure data among these groups to uncover differences in their owning and renting patterns, which have important implications not just for housing markets, but also for addressing inequalities in wealth and access to opportunity.

Data for the report are based on the U.S. Census Bureau’s quarterly Housing Vacancy Survey (HVS). 

Quarterly Tenure Rates Change Course

Last quarter’s rise in the national homeownership rate ends an 18-month stretch of relatively stable tenure levels, during which the share of households owning and renting their homes fluctuated within a narrow 0.2 percent range. While the current jump is still modest and may only be a temporary blip, it still signals the highest level of homeownership in over five years.

The Housing Tenure Trends report also compares indexed changes in tenure rates with indices of inflation-adjusted homeowner and renter costs over time. Both cost metrics have seen dramatic increases since 2012, with renter costs surpassing prior records in each of the last eight quarters. The disconnect between tenure and cost trends suggests very different forces are driving these metrics, including regional-level differences and barriers to accessing preferred tenure and housing options.

Not All Households Experience the Same Tenure Patterns

Quarterly tenure rates are useful for tracking national-level trends over short periods of time. For more detailed data on tenure by subgroup, however, quarterly data are more susceptible to seasonal variation and less reliable indicators of the true experiences of households by age, race/ethnicity, and income. For that reason, the Housing Tenure Trends report uses averages of quarterly data to report on annual rates of owning and renting by subsets of U.S. households.

When viewed this way, the short-term rise in homeownership rates observed among all subsets last quarter is less dramatic, as declines in homeownership earlier in 2019 among some groups temper the effect. For instance, while all age groups except 45-to-54-year-olds saw increases in Q3 homeownership rates, only the youngest group – those under 35 years – have a higher homeownership rate so far in 2019 relative to the prior year. 

By income, households earning below the national family median income also continue to see larger gains in homeownership than higher-income households, both in absolute and relative-to-long-run terms. It is worth noting that some of this pattern may be due to shifts in the income status of households rather than in the buying and renting behavior within income groups. For instance, retiring homeowning Baby Boomers may be contributing to increases among lower-income households. 

Tenure Trends Vary Widely by Race/Ethnicity

The most dramatic divergence in tenure trends is among household subsets by race and ethnicity. As noted in the Q2 Housing Tenure Report, the homeownership rate among non-Hispanic Black households has been steadily declining since the end of the housing boom in 2004. Even a significant jump in quarterly Black homeownership rates in Q3 – from 40.6 to 42.7 percent – is not enough to reverse the downward trend for the year to date.

At the other end of the spectrum, Hispanic households have experienced notable increases in their homeownership rates since 2014, rising from 45.4 to 47.3 percent. Along the way, they have narrowed their tenure gap relative to non-Hispanic White households to 26 percentage points, which is near the historical low for this metric (25.6 points in 2007). 

The National Association of Hispanic Real Estate Professionals® (NAHREP) reports in its annual State of Hispanic Homeownership Report that higher income growth, labor force participation, and multi-earner household shares among Hispanics are contributing to this trend. Increased attention and specialized services from mortgage lenders and real estate brokers are also helping more Hispanic households make the move to homeownership.

Despite these gains, the Hispanic rentership rate remains above 50 percent, with Hispanics accounting for 20 percent of all renter households (versus 10 percent of owners). Their concentration in high-cost states and metro areas adds extra pressure onto their ability to find affordable housing options.

Going forward, Hispanic households are expected to have an even greater role in driving tenure trends. This group is projected to account for 37 percent of all household growth from 2018 to 2028, according to Harvard University’s Joint Center for Housing Studies, more than any other racial/ethnic subgroup. If Hispanic homeownership rates continue their upward trajectory during this period, the national homeownership rate will likely follow suit. 
 

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