The number of homeowner households in the United States decreased by 0.1% year-over-year in the second quarter to an estimated 86.2 million, marking the first decline since 2016, while renter households simultaneously saw a 2.6% increase to 46.4 million, according to a recent analysis by Redfin based on U.
S. Census Bureau data.
This shift indicates a growing preference or necessity for renting over homeownership amidst challenging market conditions. A homeowner household is defined as one where the head of the household reports owning the property, while a renter household is one where the head reports renting.
Chen Zhao, Redfin’s head of economics research, attributed the stagnation in the homeowner population to multiple factors. “America’s homeowner population is no longer growing because rising home prices, high mortgage rates and economic uncertainty have made it increasingly difficult to own a home,” Zhao stated. He also noted that societal trends, such as individuals getting married and starting families later, contribute to delayed home purchases.
Market data underscores these challenges, with the median home sale price reaching $443,867 in July, a 1.4% increase year-over-year and the highest July level on record. Mortgage rates stood at 6.56%, more than double the historic lows recorded during the pandemic. Consequently, more Americans have opted for renting, potentially foregoing the wealth-building benefits associated with home equity.
Despite the recent decline in homeowner households, the overall homeownership rate remained relatively stable at 65% in the second quarter, a slight decrease from 65.6% a year prior. Conversely, the rentership rate rose marginally from 34.4% to 35% over the same period. There is some positive outlook as mortgage rates have recently begun to fall from a peak of over 7% earlier in the year, a development that may encourage some prospective buyers to re-enter the market.
Redfin, a technology-driven real estate company and part of Rocket Companies (NYSE: RKT), aims to create an integrated homeownership platform that spans from property search to closing. The company provides services such as on-demand tours and facilitates home loan applications through Rocket Mortgage, working with local agents to reduce fees for clients.
