The U.S. homeownership rate rose to 64.2 percent in the fourth quarter of 2017 from 63.7 percent a year earlier, according to data released Tuesday by the U.S. Census Bureau.
The year-to-year increase is the first one in 13 years, and it was driven by young buyers who purchased their first homes. The share of Americans who own a home has been on the rise since the first quarter of last year, indicating a reliable upward trend.
“This is market, market and market … there’s no government incentive program in sight that is having this effect,” says Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania. “This is back to basics.”
The homeownership rate among households headed by someone under age 35 rose to 36 percent in the fourth quarter from 34.7 percent a year earlier – the largest increase of any age group during the period.
In 2018, buyers are expected to face continued supply shortages, rising home prices, increasing mortgage rates, and changes to the tax code that will offer fewer incentives for homeownership. However, the tax changes could also boost the overall economy and put more money in renters’ pockets, which could help them save for a downpayment.
“We’ve got lots of jobs and easier credit, and that should win the day,” said Mark Zandi, chief economist at Moody’s Analytics.