The U.S. homeownership rate declined in the first quarter, hitting its lowest value since 1995, signaling that buyers face substantial challenges in the current market, according to data released Tuesday.
The homeownership rate declined to 65% in the first quarter, down from 65.4% during the same period in the prior year, according to a report from the U.S. Census Bureau.
“Tight credit, tight for-sale inventory, the challenge of saving for a down payment, and more rental single-family supply all helped lower the homeownership rate,” said Jed Kolko, chief economist at real estate site Trulia.
The homeownership rate represents the number of households that are occupied by owners divided by the total number of occupied households. The rate has declined fairly steadily for years, and is down from a peak of 69.2% in 2004, when the housing market bubble was ramping up.
From region to region, homeownership rates show substantial variation. In the first quarter, the homeownership rate stood at 59.4% in the West, 62.5% in the Northeast, 66.5% in the South and 70% in the Midwest.
Interest rates remaining near record lows have supported the housing market’s recovery over the past year. However, economists say overly strict lending standards are keeping some would-be borrowers from buying homes. And though the economy has steadily added jobs, unemployment remains relatively high.
Home builders have taken notice of these trends, ramping up apartment construction. Recent government data showed that construction starts for structures with at least five units rose 82% over the 12 months ending in March, compared with a gain of 29% for single-family homes.
Elsewhere Tuesday, the Mortgage Bankers Association reported that first-quarter originations for commercial and multifamily mortgages rose 9% from the same period in the prior year.