Federal Reserve Bank of New York – Liberty Street Economics – Andrew Haughwout, Richard Peach, and Joseph Tracy, February 17, 2017

“The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965. In this blog post, we look at underlying demographic trends to gain a deeper understanding of the large increase in the homeownership rate from 1995 to 2005 and the subsequent large decline. Although there is reason to believe that the homeownership rate may begin to rise again in the not-too-distant future, it is unlikely to fully recover to its previous peak levels. This is a disconcerting finding for those who view homeownership as an integral part of the American Dream and a key component of income security during retirement. An estimate of the homeownership rate is published each quarter by the U.S. Census Bureau, based on a sample of housing units. A quarterly time-series of the not-seasonally-adjusted homeownership rate since 1965 is presented in the chart below. The first thing to catch the eye when looking at this chart is how much the homeownership rate rose over the period from the mid-1990s through 2005, and then how much it has declined since reaching a peak. The homeownership rate of 63.4 percent in the third quarter of 2016 is only modestly above the series low of 63.0 percent in the fourth quarter of 1965…”