Weak Demand for Home Ownership Feared
The percentage of U.S. homes that are vacant and for sale remained at elevated levels during the third quarter, and the percentage of people who own their homes continued to decline, according to a Census Department report. These are the starkest signs yet of the severity of the damage in the housing market caused by speculation, overbuilding and rising foreclosures.
The homeowner-vacancy rate, which measures the number of vacant homes for sale, rose to 2.7% — which translates into about 2.1 million houses — in the third quarter from 2.6% in the previous quarter. Such vacancies hit a high of 2.8% in the first quarter. Before 2006, the number hadn’t risen above 2% since the government began keeping such records in 1965.
Economists say the rising supply of vacant homes means construction activity will likely have to fall further, while buyers slowly absorb these vacant homes, creating an even greater drag on prices and on economic growth. Housing starts fell 10% in September from August. In previous housing downturns of the early 1980s and early 1990s, annual starts fell below one million; in September, annual housing starts were at 1.19 million. But, according to some economists, further declines are likely if the vacant inventory continues to rise.
The latest decline in the homeownership rates indicates that this year, as many as 900,000 households moved from owning homes to renting them, which implies a very low level of housing demand over the next several years.