A record number of foreclosures in the third quarter of 2010 has left more houses on the market with fewer buyers interested in purchasing them. The US Census Bureau today reported that the U.S. homeownership fell to 66.9%, its lowest level since 1999. The homeowner vacancy rate in the third quarter came in at 2.5%. The rental vacancy rate totaled 10.3%, lower than the second quarter and significantly lower than the third quarter of 2009.
The drop in homeownership, coupled with weak sales of new homes, is weighing on homebuilders. PulteGroup, Inc. (NYSE: PHM) reported an EPS loss this morning of -$2.63 on nearly $1 billion in impairment and other charges. Lennar Corp. (NYSE: LEN) reported a gain in its third quarter, and estimates for the fourth quarter predict an even smaller gain. KB Home (NYSE: KBH), DR Horton Inc. (NYSE: DHI), Toll Brothers Inc. (NYSE: TOL), Hovnanian Enterprises Inc. (NYSE: HOV), and Beazer Homes USA Inc. (NYSE: BZH) are expected to do no better than break even in their next reporting period, with losses more likely.
The Census Bureau reports that 85.6% of all types of housing are currently occupied, while 14.4% are vacant. According to the bureau, there were 130.68 million housing units in the U.S. in the third quarter, up from 130.02 in the same period a year ago. Of the 660,000 units added since last year, occupied rental units jumped by about a million as owner-occupied units fell by about 290,000.
Homeownership rates by race and ethnicity rose slightly for whites and more strongly for the “All Other Races” category, which includes Asians, Hawaiian and Pacific Islanders, and Native Americans. For African-Americans and Hispanics, ownership rates continued to decline. Since the first quarter of 2007, homeownership among African-Americans has fallen from 48% to 45%, and among Hispanics from 50.1% to 47%.
On the basis of family income, homeownership rates among those with income greater than or equal to US median family income has fallen from 83.3% in the first quarter of 2007 to 81.9% in the third quarter of 2010. For those with family incomes less than the median, homeownership rates fell from 52.1% to 51.9%.
Statistically, U.S. homeownership appears to reflect recent reports on fewer mortgages, more foreclosures, and continued weakness in the homebuilding sector. And although the report does not say so, continuing high unemployment and stagnant wages are the likely culprits.
