By Prashant Gopal
The U.S. homeownership rate climbed from the lowest level in 18 years, signaling that the real estate rebound is drawing in more buyers.
The share of Americans who own their homes was 65.3 percent in the third quarter, up from 65 percent in the previous three months, the Census Bureau reported Tuesday. The prior level was the lowest since the third quarter of 1995.
Rising real estate values are removing negative equity, helping homeowners avoid foreclosure, while also luring would-be purchasers into the market before prices and mortgage rates go higher. The pool of eligible buyers is expanding as U.S. employment improves and families who lost properties during the recession repair their credit and seek another chance at owning.
Americans whose properties were repossessed were once "homeowners by choice and now they are renters by chance," Richard Smith, chief executive officer of Realogy Holdings Corp., owner of brokerage brands Coldwell Banker and Century 21, said in a telephone interview. "They will repair their credit and be back in the market as homebuyers. We don't grow up in the country aspiring to be renters. We aspire to be owners."
Home prices jumped 12 percent in September from a year earlier, the 19th straight annual increase, Irvine, Calif.- based CoreLogic Inc. said Tuesday.
Minorities and young people are among the groups with the sharpest declines in homeownership since the crash. In the third quarter, the rate for blacks rose to 43.1 percent from 42.9 percent the previous quarter, Census Bureau data show. The rate for whites was unchanged at 73.3 percent.
The increase in the national homeownership rate was the first in a year. The measure peaked at 69.2 percent in 2004. The seasonally adjusted rate in the third quarter was 65.1 percent, unchanged from the previous three months.
"Today's data could be interpreted as an early sign that mortgage buyers are finally beginning to make more of a contribution to the housing recovery," Ed Stansfield, chief property economist at Capital Economics Ltd. in London, wrote in a report Tuesday.
It is too soon to call a turning point given recent increases in mortgage rates and declines in home sales, he said. Contracts to buy previously owned residences tumbled the most in three years in September as borrowing costs climbed, the National Association of Realtors reported last week.
The homeowner vacancy rate, the share of properties empty and for sale, was unchanged in the third quarter at 1.9 percent, Tuesday's Census data showed. The vacancy rate for rented homes rose to 8.3 percent from 8.2 percent the previous three months.
Owner-occupied properties made up 56.4 percent of housing units in the third quarter. Of the 132.8 million homes in the U.S., about 10.2 percent of those used year-round were vacant.
Vacancies "remain stubbornly high," Jed Kolko, chief economist for Trulia Inc., a San Francisco-based online real estate information service, said in an emailed statement. "An unusually high share of vacant homes is being held off the market — that is, neither for sale nor for rent.'