St. Louis Fed Launches New Housing Market Perspectives Report Featuring Economist Bill Emmons

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Inaugural Issue Discusses "If Housing Markets Are Recovering, Why Is the Homeownership Rate Still Falling?"

U.S. Homeownership Since 1900

U.S. Homeownership Since 1900

This marks the 11th consecutive year of decline and brings the homeownership rate back to the level it first reached in 1968.

The St. Louis Fed's Community Development department has released a new online publication featuring analysis from St. Louis Fed economist and assistant vice president Bill Emmons as part of its quarterly Housing Market Conditions report. The inaugural issue of "Housing Market Perspectives – On the Level with Bill Emmons," looks at the question of why home ownership rates in the U.S. are at their lowest levels since 1968, despite historically low mortgage rates and rising employment.

Emmons noted the following improvements in the U.S. housing market in 2015:

  • house prices increased faster than inflation for the fourth consecutive year;
  • home sales increased 7 percent in 2015, reaching the highest level since 2007;
  • new-home construction rose 11 percent in 2015, likewise the best since 2007;
  • mortgage balances increased for the first time since 2008; and
  • mortgage delinquencies declined for the sixth straight year, returning to 2007 levels.

Nonetheless, amidst these improvements, "one important gauge of housing conditions continued to fall in 2015—the homeownership rate," Emmons said.

After reaching a peak of 69 percent in 2004, the national homeownership rate declined in 2015 to 63.7 percent.

“This marks the 11th consecutive year of decline and brings the homeownership rate back to the level it first reached in 1968,” he added.

While a significant drop, he noted that a homeownership rate above 50 percent was unprecedented before post-World War II political and social changes turned the U.S. into a predominantly home-owning society. In addition, until the late 1990s, the rate hovered for close to three decades within a narrow range between 63 percent and 66 percent.

"This still might be the range to expect in the future," Emmons said. “Conversely, homeownership could keep falling from here rather than stabilize."

Looking forward, Emmons discussed two possible scenarios, the "return-to-normal" scenario and the "retreat-from homeownership" scenario.

"It’s too soon to judge whether a long 20-year cycle is nearing its end (the return-to-normal scenario) or we are in the midst of a secular decline that could drive the homeownership rate even lower (the retreat-from homeownership scenario)," he said. "Perhaps there are elements of both explanations at work. In any case, it appears unlikely that the U.S. homeownership rate will return to its historic peak of 69 percent anytime soon."

The new Housing Market Perspectives publication complements the data and heat maps updated each quarter as part of the St. Louis Fed's Housing Market Conditions (HMC) report. The HMC shows the latest housing market data for the U.S. as a whole, as well as for the seven Midwest and Midsouth states that comprise the St. Louis Fed's Eighth District, via:

  • color-coded maps that reflect the number of mortgages considered seriously delinquent;
  • color-coded maps that reflect the quarterly percent change of seriously delinquent mortgages, and
  • historical house price charts based on Federal Housing Finance Agency (FHFA) and CoreLogic data.

HMC charts and data are also available for the Metropolitan Statistical Areas (MSAs) of the St. Louis Fed's four zone cities: St. Louis; Little Rock, Ark.; Louisville, Ky.; and Memphis, Tenn.

To subscribe for email alerts for Housing Market Perspectives, sign up via the subscriptions page. For further information, please contact Suzanne Jenkins at 314-444-8842 or suzanne.m.jenkins(at)stls(dot)frb(dot)org.

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