Rental Vacancy Picks Up, Homeownership Remains Steady – News

In the third quarter of 2023, the homeownership rate was 66.0%, a 0.1 percentage point increase from the second quarter. For-sale inventory fell compared to the previous year starting in July, and has remained lower year-over-year since. The inventory crunch puts upward pressure on prices and creates a generally more competitive homebuying environment. Mortgage rates reached 20-plus year highs in October, cutting deeper into home shopper budgets and pushing many homeowners to stay put. As a result, the homeownership rate ticked up and homeowner vacancy remained low in the third quarter of 2023.

The homeowner vacancy rate ticked up slightly to 0.8% in the third quarter of 2023, but remained lower than the previous year’s level. The ongoing housing shortage and inventory crunch means that available homes were filled quickly and fewer homes sat empty in the last quarter. Existing homeowners report feeling ‘locked-in’ by today’s mortgage rate, and many are choosing not to sell, further contributing to the low homeowner vacancy rate. The Midwest and the Northeast both saw a vacancy rate of 0.7% in the third quarter. These regions have become particularly popular over the last year as buyers hone in on affordable locales as highlighted in the third quarter’s WSJ/ Emerging Housing Markets Index. Similarly, suburbs, which tend to be more affordable, saw a homeowner vacancy rate of 0.7% in the third quarter as buyers looked for areas within commuting distance of economic hubs, but at a lower price point. Meanwhile, principal cities saw a homeowner vacancy rate of 1.0%, lower than a year prior but higher than suburbs. Interestingly, towns outside of MSA’s saw the highest vacancy rate of any area measured at 1.1%. 
The rental vacancy rate ticked up to 6.6%, 0.6 percentage points higher than a year prior and 0.3 percentage points higher than the previous quarter. Multifamily supply has made its way into the market after a period of strong multi-family construction. As a result, more supply means more units are empty, which takes some pressure off of prices. However, the rental absorption rate remains strong, indicating significant demand for affordable units. The rental vacancy rate was highest in the South (8.1%), followed by the Midwest (7.2%), the West (5.8%), and the Northeast (4.3%) saw the lowest rental vacancy.

The homeownership rate for householders under 35 fell for the third quarter in a row, dropping 0.2 percentage points quarter-over-quarter and 1.0 percentage point year-over-year to 38.3%. Younger homebuyers face significant challenges as many do not have the advantage of existing home equity to leverage into a home purchase. The homeownership rate for the under-35 group remains higher than pre-pandemic, but below its 2020 peak. Householders over the age of 65 saw the highest homeownership rate at 79.2%, slightly higher than the previous quarter, though lower than the previous year.
In the third quarter of 2023, the homeownership rate ticked up for the Asian, Native Hawaiian and Other Pacific Islander group as well as Hispanic householders. Asian, Native Hawaiian and Other Pacific Islander homeownership increased 0.9 percentage points compared to the previous quarter, rising to 62.7%, 1.1 percentage points higher than the previous year. Hispanic homeownership increased 0.4 percentage points quarter-over-quarter to 49.4%, up 0.7 percentage points year-over-year. White homeownership remained steady at 74.5%, the same as the previous quarter and 0.1 percentage points below the previous year. Black homeownership fell 0.2 percentage points from the previous quarter to 45.5%, but remained 0.3 percentage points higher than the previous year.
The homeownership rate gap is one reflection of the challenges many Americans face in getting access to housing and related services. It’s also one of the reasons why launched its “For Everyone” microsite, which offers resources and guidance to help further the goal of  equal housing opportunity and professional services for all people, along with the details of what believes about fair housing and why.
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