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Homeownership rate begins to recover

Category | Correspondent Lenders | Correspondent Lending News
The homeownership rate is on the rise.

U.S. homeownership numbers declined sharply following the financial crisis, and it remains unclear if they will ever fully recover. Recent weeks brought some good news, however, as the rate rebounded for the first time in a while. Increased homeownership likely has several causes, but improved inventory and a rush to lock in low interest rates prior to a potential Federal Reserve rate hike are major contributors. This increase doesn't necessarily signal a return to the heady days that proceeded the crash, but it demonstrates that there is still homebuying demand, and may indicate a resurgence that will continue into the coming year.

Homeownership shows signs of life
Prior to the housing crash, homeownership was creeping toward 70 percent in America, according to the Census Bureau. As of the third quarter this year, it sits at 63.7 percent. That's actually an improvement of 0.3 percent from its place in the second quarter, which represents the metric's first positive change in two years. Though this may seem like a small shift, it signals a change in the dynamics of the housing market. 

"A change in housing market dynamics."

The majority of the gains came from young people. The homeownership rate among people under the age of 35 increased a full percentage point during the past quarter to hit 35.8 percent. That serves as a counter argument to the idea that young people are not at all interested in homebuying, though it's not yet clear how large or prolonged the growth in this part of the market will be. 

An increase in inventory
Some amount of the housing market's gains can probably be attributed to low interest rates that make it a particularly good time for individuals to purchase a home, but that does not necessarily account for everything. Larger inventory, which allows new buyers to find a home that fits into their budget more easily, is likely a cause of improved homeownership. 

According to, the number of homes on the market has declined by just over 4 percent year over year, but the current season has been positive for people who are in the housing market. Inventory grew more than 6 percent between the past two months, and that sort of improvement, coupled with low interest rates and gains in employment means more individuals have been able to purchase a home. 

It remains unknown how an eventual widely expected Fed rate hike will impact these numbers, but it seems increasingly likely the housing market will see gains throughout 2016.

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