Homeownership Rate Falls to 1995 Low

Investor demand for single-family rental properties over the past two years has reduced the overhang of foreclosed properties, but it may also be having an impact on the homeownership rate.

The Census Bureau reported Tuesday the U.S. homeownership rate dropped to 65% in the first quarter, the lowest rate since 1995.

The homeownership rate was relatively stable during 2012 and ended the fourth quarter at 65.4%.

Since 2010 the number of vacant homes has fallen from 2 million to 1.5 million as of yearend 2012. The 1.5 million level used to be considered normal before the housing bust.

An excess supply of vacant homes generally reduces demand for new homes and puts downward pressure on house prices.

However, some real estate agents have been complaining the investors are crowding out first-time buyers. And turning REO into rentals and other factors is keeping the supply of homes for sale very tight.

Meanwhile, the Census Bureau reported the number of vacant homes for sale unexpectedly rose 7.4% in the first quarter from the prior quarter to 1.61 million. That is relatively unchanged from 1.65 million in the first quarter of 2012.