A transition from renting to owning is the powerful driver of household demand.

According to the Census Bureau’s Housing Vacancy Survey (HVS), the U.S. homeownership rate increased in the last quarter of 2018 and now stands at 64.8%. The national homeownership rate is on a sustainable upward trend, after dropping to a cycle low of 62.9% in the second quarter 2016. The HVS also provides a timely measure of household formations – the key driver of housing demand. The housing stock-based HVS revealed that the count of total households increased to 122.4 million in the last quarter of 2018 from 120.1 million a year ago. 

The gains are largely attributed to strong owner household formation. Indeed, the number of homeowner households has been climbing since the third quarter of 2015, while the number of renter households has been on a downward trend. This implies a transition from renting to owning is the powerful driver of household demand. Specifically, the number of homeowners increased by 1.7 million, but the number of renter households declined by 167,000 in 2018. 

Source: The National Association of Home Builders