The comeback of the U.S. housing market has been one of the most bullish economic stories in the world since the financial crisis. Sales, construction starts, and prices have all trended higher.
While sales are up, ownership rates are actually down as reluctant Americans are opting to rent rather than buy.
According to new Census data, the homeownership rate slipped to 64.8% in Q1 from 65.0 % a year ago and 65.2% in the previous quarter.
This is the lowest level since Q3 1995.
With the housing market recovery stalling a bit recently, some argue that this trend needs to reverse.
“For housing market re-acceleration, a pickup in household formation is essential,” said UBS’s Sam Coffin. “Household formation had accelerated through a year ago but faltered surprisingly in 2013.”
Coffin believes Ownership rates will pick up again soon.
Others, however, are not so optimistic.
“Tight mortgage credit, especially for first time homebuyers, we expect will contribute to a continued downtrend in the homeownership rate in coming years and an historically disproportionate share of new household formations going into rentals and multi-family,” said Morgan Stanley’s Ted Wieseman earlier this month.