After a bout of lackluster numbers this year, home sales in September soared—15.5 percent more new properties sold, and 3.9 percent more preowned sales. (It’s a start!) Analysts attributed the bounce to low mortgage rates, which have offset short supply, and assisted buyers grappling with high prices.
We have low rates to thank this week, too. According to Census reporting, this past quarter, the homeownership rate rose to 64.8 percent. While that’s not materially up year-over-year, it’s an increase from 64.1 percent quarter-over-quarter—a nod to rates, which are giving homebuyers more to work with.
“Falling mortgage rates over the past several months has likely helped some marginal buyers to make the switch from renting to owning,” explains Ralph McLaughlin, CoreLogic deputy chief economist and executive of Research & Insights.
“While mortgage rates are typically a third- or fourth-order consideration when buying a home, when faced with a supply- and affordability-constrained market, potential homebuyers become more rate-sensitive on the upside,” McLaughlin says. “The sudden increase in the number of owner-occupiers and net decrease in renters across the country reflect this.”
According to the Census report, of all housing units, 56.9 percent were occupied by owners, and 30.9 percent rented.
There’s other highlights/positives in the report, as well:
- The Hispanic homeownership rate rose to 47.8 percent, climbing from 46.3 percent in Q3 2018. This aligns with a recent related report from Zillow, which found gains in homeownership in the Latinx segment, a Hispanic subset.
- Of the four regions in the U.S., homeownership in the Midwest remained tops, at 69 percent. According to the National Association of REALTORS®, the median price in the region in September was $213,500, far less than the Northeast, South and West. According to data from realtor.com®, the area’s drawing millennials in spades, too.
- While we’re on millennials…Gen Y homeownership is ramping up. The homeownership rate for the under-35 segment ticked up to 37.5 percent, increasing from 36.8 percent in Q3 2018.
While the emphasis in the headlines is often on sales, the data on homeownership matters. Why? If the homeownership rate stagnates, it generally indicates stalling wages, which affects affordability. To be sure, in September, earnings grew just 2.9 percent year-over-year, according to the Labor Department. We aren’t making more, but, with historically low mortgage rates, we’re able to bridge the gap.
So, kudos low rates. We’re relying on you!
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
Many consumers think that a lower interest rate always means lower mortgage interest rates. This is not necessarily true. Have you published or will you publish an article that serves to educate both buyers and Realtors on this topic?