Limited Housing Availability and Elevated Mortgage Rates Remain a Headwind to Homeownership

Last week, the US Census Bureau released its Housing Vacancy Survey (CPS/HVS) for 2023Q4. Accord to the survey, with further analysis provided by the National Association of Home Builders (NAHB), the US homeownership rate declined to 65.7%—a result of persistently tight housing supply and elevated mortgage rates.

The Q4 reading is 0.3 percentage points lower than 66% in Q3. Compared to the peak of 69.2 in 2004, the homeownership rate is 3.5 percentage points lower and remains below the 25-year average rate of 66.4% amid a multidecade low for housing affordability conditions.

The NAHB notes that the homeownership rate for householders aged less than 35 decreased to 38.1% in Q4, as affordability is declining for first-time homebuyers. This age group, particularly sensitive to mortgage rates and the inventory of entry-level homes, saw the largest decline among all age categories.

The national rental vacancy rate stayed at 6.6%, and the homeowner vacancy rate inched up from 0.8% to 0.9%. The homeowner vacancy rate is still hovering near the lowest rate in the survey’s 67-year history (0.7%).

The housing stock-based HVS revealed that the count of total households increased to 131.2 million in Q4, up from 129.7 million a year earlier. The change is largely due to modest gains in owner household formation—a 772,000 increase—while renter households increased 694,000.