Homeownership Rate Remains Strong Through Fall

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According to the U.S. Census Bureau This Week in Real Estate the homeownership rate reached its second-highest level in the third quarter with all four regions of the country experiencing annual increases. While the National Association of Realtors September Pending Home Sales Index realized a modest 2.2% decrease from August it was 20.5% higher than the prior year. Below are a few newsworthy events from the fourth week of October that influence our business: 

Pending Home Sales Fall Back to the 2nd Highest Level on Record. Pending home sales faltered a bit in September, like new home sales announced earlier this week, the decline ended a four-month winning streak. The National Association of Realtors® (NAR) said that its Pending Home Sales Index (PHSI) fell to 130.0, a 2.2 percent retreat from the August level. However, it is still 20.5 percent higher than in September 2019 and retained double-digit annual growth in all regional indices. “The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” said Lawrence Yun, NAR’s chief economist. “With persistent low mortgage rates and some degree of continuing jobs recovery, more contract signings are expected in the near future.” Pending sales grew 2.0 percent in the Northeast to a PHSI reading of 119.4. This is up 27 percent year-over-year. In the Midwest, the index slid 3.2 percent to 120.5 but is 18.5 percent higher than the previous September. The PHSI in the South declined 3.0 percent to 150.1 in September, an annual increase of 19.6 percent. Pending sales were down 2.6 percent in the West, but at 116.8 the index was up 19.3 percent from a year ago.

New Home Sales Finally Level Off at 14-Year High. New home sales declined in September for the first time since April. The U.S. Census Bureau and the Department of Housing and Urban Development said sales of newly constructed homes were sold at a seasonally adjusted annual rate of 959,000 units, a 3.4 percent decline from the prior month. Nonetheless, sales are still up 32.1 percent from one year ago. For the year-to-date 618,000 homes have sold. This represents a 16.9 percent increase over the 529,000 homes sold in the first nine months of last year. Sales of newly constructed homes declined by 28.9 percent in the Northeast compared to August and were 5.9 percent lower on an annual basis. In the Midwest, sales were down 4.1 percent for the month but rose 34.8 percent year-over-year. There was a 4.7 percent decline in the South although the annual increase was 27.4 percent. The West posted the only monthly gain, 3.8 percent, and sales were 49.7 percent higher than in the prior September.

Homeownership is Growing, Especially Among Younger Age Groups. The U.S. homeownership rate in the third quarter fell back slightly from the prior quarter. The second quarter saw the highest level for homeownership since the second quarter of 2008. Homeownership in the third quarter, according to the U.S. Census Bureau, was 67.4 percent, 0.5-point decrease from the previous period, but up from 64.8 percent in the third quarter of 2019. That rate ties with the second quarter of 2009 as the second-highest rate. The rate was highest in the Midwest and South at 71.2 percent and 70.8 percent and substantially lower in the Northeast (62.0 percent) and West (62.1 percent). All four regions posted annual increases. The rate increased for all age groups. Those under the age of 35 jumped from 37.5 percent in the third quarter of last year to 40.2 percent and the rate for those 35 to 44 years old rose more than three points to 63.9 percent. The rate for those 45 to 54 was 72.0 percent, 55 to 64, 76.4 percent and those over 65 had a rate of 80.7 percent.

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