Bloomberg News

U.S. Homeownership Rate Declines to 1998 Levels, Census Says

January 31, 2012

Jan. 31 (Bloomberg) -- The U.S. homeownership rate fell in the fourth quarter as borrowers lost homes to foreclosure and tight lending standards stalled purchases.

The rate fell to 66 percent from 66.3 percent in the third quarter, as low as it was in 1998, the Census Bureau said in a report today. It peaked at 69.2 percent in June 2004 and fell to a post-peak low of 65.9 percent in the second quarter of last year, according to the report.

“The share of Americans who are willing and able to own their own home is still falling,” Paul Diggle, an economist with Capital Economics in London said today in a note. “The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords’ returns, higher.”

Stricter lending criteria, a lack of money for down payments and concerns that prices will fall further kept many Americans from taking advantage of low borrowing costs that raised the housing affordability rate to record levels last year, according to the National Association of Realtors. Home values fell 3.7 percent in November from a year earlier, bringing repeat sales prices 33 percent below their July 2006 peak, according to the S&P/Case-Shiller Composite 20-City index released today.

The ownership rate may decline further and home repossessions may increase this year after lenders settle investigations by state attorneys general into their foreclosure practices. States have until Feb. 3 to decide whether to accept a nationwide settlement involving banks including JPMorgan Chase & Co. and Bank of America Corp. that may total as much as $25 billion.

New Foreclosures Slow

The number of foreclosures initiated fell 39 percent last year from 2010 as banks slowed repossessions, Lender Processing Services Inc. reported Jan. 27. The average home sold at a foreclosure auction was 667 days delinquent as of Nov. 30, according to Lender Processing Services, a real estate information service based in Jacksonville, Florida.

President Barack Obama in his Jan. 24 State of the Union speech called on lenders to ease mortgage-refinancing terms. A revised Home Affordable Modification Program, unveiled Jan. 27, would pay mortgage aggregators Fannie Mae and Freddie Mac to forgive debt on some houses that have lost value.

The homeownership rate rose to a record in 2004 when President George W. Bush, running for re-election, called for expanding home-loan availability to create an “ownership society.”

About 2.38 million homes were listed for sale in December, the fewest since March 2005, the realtors association said on Jan. 20.

Of the estimated 132.5 million U.S. homes, 18.4 million, or 13.9 percent, were vacant in the fourth quarter, a decrease of 160,000 from a year earlier, according to the report. That includes homes for sale or rent or held off the market and vacation properties used seasonally.

The vacancy rate for rental homes was 9.4 percent in the fourth quarter, the same as a year earlier. The rate for owner- occupied homes fell to 2.3 percent from 2.7 percent a year earlier.

--Editors: Christine Maurus, Ross Larsen.

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net


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