US home ownership lowest in 20 years
Rising household formation due to stronger labour market and easing of credit restrictions expected to boost home building in year ahead
US home ownership fell to a 20-year low in the fourth quarter, but a sharp rebound in the rate at which Americans are setting up home is expected to help drive a pick-up in housing.
The seasonally adjusted home ownership rate slipped to 63.9 per cent, the lowest level since the third quarter of 1994, the Department of Commerce said.
The rate, which peaked at 69.4 per cent in 2004, was 64.3 per cent in the third quarter.
Household formation, however, more than quadrupled to 1.7 million in the fourth quarter from only 356,000 in the same period in 2013. While the gains were driven by renter households, that should provide a boost to home building.
Housing has lagged acceleration in the broader economy. But with household formation picking up, thanks to a strengthening labour market, and the government taking steps to ease credit requirements for first-time buyers, housing is expected to regain momentum this year.
"The combination of a high share of young adults living in the parental home, falling mortgage rates and loosening credit means that the outlook for household formation is strengthening," said Paul Diggle, a property economist at Capital Economics in London.