The percentage of Americans who are homeowners hasn’t budged much this year. The first-quarter numbers followed eight consecutive quarters of year-over-year increases.
The homeownership rate for the first quarter of 2019 was 64.2%, unchanged from a year ago, according to data released Thursday by the U.S. Census Bureau. What’s more, the rate was actually down 0.6 percentage points from the fourth quarter.
“Anemic homeownership rate growth among younger buyers signals the difficulties many of those buyers continue to face in securing a down payment, finding a home in their budget or qualifying for a loan,” said Skylar Olsen, Zillow’s ZG, +0.44% director of economic research.
Here are 4 reasons why the homeownership rate declined in the first quarter:
Americans are rattled by a tumultuous stock market: Joel Kan, vice president of economic and industry forecasts at the Mortgage Bankers Association, a trade group that represents lenders, blamed “market volatility and decline in consumer confidence.”
People are choosing to keep renting: The number of new renter households increased by nearly 500,000 year-over-year in the first quarter, according to the Census Bureau.
With home price appreciation outpacing wage growth across most of the country, it’s become harder to save up enough for a down payment and budget for all the other costs associated with owning a home.
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Younger people are not buying homes: The homeownership rate among those under the age of 35 dropped 1.1% during the first quarter, reversing the gains they had made in the past year.
However, separate analysis from the New York Fed suggested that the share of buyers who are purchasing a home for the first time has actually remained “relatively stable.”
Generation X-ers are also skittish: Additionally, the homeownership rate among people between the ages of 35 and 44 dropped to 60.3% from 61.1% in the previous quarter.
These consumers were largely responsible for the national homeownership rate hitting a recent high in the fourth quarter.
Here are 4 reasons why you shouldn’t be concerned about the flat homeownership rate:
People are still forming new households: Household formation overall increased by more than 1% in the first quarter. This is a positive sign for the housing industry because people are more likely to buy a home as a member of a couple or family than as a single individual.
Overall, Corelogic CLGX, +1.52% predicts there will be more than 40 million new households under the age of 30 formed over the next two decades.
Homeownership is close to historic highs: The national homeownership rate isn’t too far below the historic average of 65.2%, which dates back to the 1960s.
“It’s still a ways off from the all-time highs approaching 70% set in the early 2000s,” Olsen said. But she said 70% was not sustainable over the long-term.
Read more: Why you may want to think twice before buying a home in the exurbs
Millennials are less likely to take financial risks: Olsen said millennials appear to be delaying life events, such as getting married or having children, which typically lead consumers toward buying a home.
Some housing markets are more active than others: More younger consumers are becoming homeowners across the Sunbelt, the East Coast and Rocky Mountain regions, according mortgage activity reported by CoreLogic.
Millions of renters still need convincing. “This rental market persistence, coupled with the sheer size of the 20-and-30-something population, is keeping rental vacancy rates low at 7% nationally and puts upward pressure on rents themselves,” Olsen said.