Rental Vacancy Down

The seasonally adjusted homeownership rate continued to slide, falling to 66.6 percent from 67.3 percent a year earlier, and down from its peak of 69.4 percent in second quarter 2004. However, the measure was essentially unchanged from third quarter's 66.7 percent.

Fourth quarter Housing Vacancy and Homeownership Report showed lower rental vacancy rates. National rental vacancy rates fell to 9.4 percent down from 10.3 percent in the third quarter and down from 10.7 percent a year earlier. This is the first time the rate has been below 10 percent since third quarter 2008 when it stood at 9.9 percent and is the lowest it has been since the 9.4 percent rate recorded in first quarter 2003. With the exception of the Northeast, the rental vacancy rate was down in each of the regions from a year earlier-the Midwest at 9.6 percent vs. 11.2 percent, the South 11.5 percent vs. 13.7 percent, and the West at 7.9 percent vs. 8.9 percent. The Northeast at 7.5 percent was statistically no different from its year earlier reading of 7.2 percent.

Meanwhile, the homeowner vacancy rate at 2.7 percent was unchanged from fourth quarter 2009 and from a statistical point of view, no different from third quarter's 2.5 percent. All of the regions were unchanged on a statistical basis from their year earlier readings.

The number of occupied housing units rose by just under 1.1 million to 112.5 million units from fourth quarter 2009. The increase was all in rental units which increased from 36.6 million units to 37.7 million units. The number of owner occupied units was unchanged at 74.8 million units.

This is an early indication that the improving economy and rising employment are having a positive effect on household formations. Implied in the numbers, is that most of the new households appear to have moved into rental units.

This is to be expected when the economic circumstances of people forced to double up with others improve and they are able to move out on their own. Eventually, expect that some renters will feel comfortable enough with their economic situation to purchase a home.

- Courtesy of NAHB