Momentum continues to build for the housing industry, as evidenced by recent news from the Census Bureau regarding homeownership.
“Contrary to some analysts’ predictions that the rate would fall to 61% or lower in the coming years, the new [Census Bureau] estimates indicate it increased to 64.2% in 2017,” said NAHB Chief Economist Robert Dietz. “The data also showed six consecutive quarters of gains in the count of home owners, with notable growth among those under the age of 35.”
Indeed, the homeownership rate of millennials (36%) registered the largest gains among all age groups, as noted by NAHB economist Na Zhao in a recent Eye On Housing blog post. That growth suggests millennials are increasingly recognizing the long-term benefits and value of investing in a home.
After bottoming out to a cycle low of 62.9% in the second quarter 2016, homeownership has been on an upswing largely due to an increase in household formations. Meanwhile, the number of renter households has gone down.
In addition to the rise in household formations, ongoing economic growth is expected to continue boosting housing demand throughout 2018 — even despite the recently enacted tax reform legislation that is likely to hold back the growth of home prices.
“While it will further boost economic activity, the new tax law is expected to contribute to price softness in some high-cost, high-tax markets now that deductions for income and property taxes are capped at $10,000 per year,” Dietz said.
As the nation’s largest demographic group — totaling more than 90 million — millennials are poised to dominate the home buying market in the months and years ahead.