The U.S. home ownership rate, led by young buyers, jumped to the highest level since 2008, signaling that the housing boom underway before the pandemic has only accelerated.
The rate was 67.9% in the second quarter, according to a Census Bureau report Tuesday. It was the fourth straight increase, climbing from 65.3% in the previous three months. The home ownership rate for buyers under age 35, rose to 40.6%, the highest in almost 12 years. The rate refers to the percentage of homes that are occupied by the owner.
The housing market has defied expectations, rebounding strongly after a pause starting in March when most U.S. businesses shut down to slow the spread of covid-19. Americans with jobs have been eager to move away from densely packed cities and apartment buildings, and the drop in borrowing costs to a record low in the quarter widened the pool of potential buyers.
"Mortgage rates are the icing on the cake for households that were thinking about buying," said Ralph McLaughlin, chief economist for Haus, a co-investment platform for home buyers. "They found an unexpected opportunity during the worst economic downturn America has seen since the Great Depression."
The home ownership rate's big jump was partly the result of a drop in the number of renter households, which fell by 7.2%, according to data in the release. High unemployment has forced many renters to move back with family or take on roommates, and some became homeowners.
"Clearly, young households not only want to become homeowners but they are actually doing it," McLaughlin said.
In a separate report, U.S. home prices grew more slowly in May, but continued to show resilience in the face of the coronavirus outbreak.
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The S&P CoreLogic Case-Shiller 20-city home price index rose 3.7% in from a year earlier. That's a drop from the 3.9% increase in April and it was a smaller gain than economists had expected. Still, home prices have risen steadily despite the pandemic and lockdowns that have badly damaged the American economy.
Phoenix led the way with a 9% annual gain in home prices, followed by Seattle gaining 6.8% and Tampa up 6%. Chicago registered the smallest increase at 1.3%.
The May slowdown, however, broke a streak in rising sales that stretched back to September. Craig Lazzara of S&P Dow Jones Indices said it was too soon to know if April was a high water mark, or if May was "a slight deviation from an otherwise intact trend."
The National Association of Realtors reported last week that sales of existing U.S. homes shot up 20.7% last month, snapping a three-month streak of falling sales. Mortgage rates are near historic lows.
"In a remarkable show of resilience, the housing market has stared the pandemic right in the eye and hasn't blinked," said Matthew Speakman, economist at the real estate firm Zillow. "Record-low mortgage rates and a shortage of available homes have fueled competition among buyers in the spring and early summer, leading to homes flying off the market at their fastest pace in years and home prices to continue to rise."
The 20-city index released Tuesday excluded prices from the Detroit metropolitan area index because of delays at the recording office in Wayne County, which includes Detroit.
The Case-Shiller index is composed of a three-month average of home prices, so this month's data includes figures from March, April and May.
Information for this article was contributed by Prashant Gopal of Bloomberg News and by Paul Wiseman of The Associated Press.