2022 Q4 Homeownership and Housing Vacancy
What Happened This Quarter:
In Q4 2022, the homeownership rate was 65.9%, 0.1 percentage points below the third quarter’s rate, but the highest fourth-quarter level since 2011. This homeownership rate was 0.4 percentage points higher than in Q4 2021, emphasizing the still-tight housing supply. Active listing prices have fallen from the summer’s peak and price growth has slowed, but prices were still 8.4% higher than the previous year in December 2022. As mortgage rates fell in December, buyers enjoyed a small win in relative affordability. However, the typical home payment was still up an average 68.0% in Q4 compared to the previous year.
Both the homeowner and renter vacancy rates came down in Q4 compared to Q3 of 2022. The homeowner vacancy rate also came down slightly versus fourth quarter of 2021, falling 0.1 percentage point to 0.8%. The homeowner vacancy rate has fallen each year since 2018, driven by the ongoing housing supply shortage. The rental vacancy rate reached 5.8%, down 0.2 percentage points compared to the third quarter, but slightly higher compared to the previous year. Rental prices fell faster than for-sale prices in the fourth quarter, signaling a slightly more balanced rental market, which would yield slightly more rental vacancy.
Buyers and renters continued to feel the now-familiar strain of unaffordability in the fourth quarter of 2022. Though improving, inflation remained high, outpacing wage growth, and both rental and home prices were up compared to the previous year. Additionally, though down from November’s highs, mortgage rates finished out the year more than 3.3 percentage points higher than the previous year. However, homebuyers have proved persistent in the face of these challenges as shown by high housing demand in lower-priced markets such as those highlighted in the Winter Emerging Housing Markets. As spring homebuying season approaches, the market can expect to feel the pressure of substantial pent-up housing demand and scarce housing supply. These forces will keep ownership rates high and vacancy rates low, as has been the trend in recent years.
Different Outcomes by Age:
The homeownership rate decreased for all age groups except 55 to 64 year olds in the fourth quarter compared to the previous quarter, though all except over 64 year olds had a higher rate compared to the previous year. As affordability worsened in the fourth quarter with the decades-high mortgage rate in November, the homeownership rate for buyers under 35 fell to the lowest level since the previous year.
Different Outcomes by Race and Ethnicity:
The homeownership rate increased for all races and ethnicities compared to the previous year. Non-Hispanic White Alone buyers continued to have the highest homeownership rate (74.5%), and Black alone continued to have the lowest (44.9%). However, the Black alone homeownership rate grew the most in the last year, increasing 1.8 percentage points. Black homeownership rates remain the lowest of the groups studied despite significant growth in the last couple of years. The homeownership rate gap is one reflection of the challenges many Americans face in getting access to housing and related services. It’s also one of the reasons why Realtor.com launched its “For Everyone” microsite, which offers resources and guidance to help further the goal of equal housing opportunity and professional services for all people, along with the details of what Realtor.com believes about fair housing and why.
