US Homeownership Rate Soars
Didier Malagies • July 29, 2020
U.A. Homeownership Rate Soars to an Almost 12-Year High
Jordan Borchard posted in
Housing in Housing News
U.S. Homeownership Rate Soars to an Almost 12-Year High
Written by: Kathleen Howley
The U.S. homeownership rate soared to an almost 12-year high in the second quarter as low interest rates allowed more Americans to qualify for mortgages
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The homeownership rate jumped to 67.9%, the highest since 2008’s third quarter, from 65.3% in the prior quarter, the Census Bureau said on Tuesday. The reported noted a change in methodology that could have impacted the numbers: Because of the COVID-19 pandemic, in-person interviews were suspended and most of the survey was conducted by telephone, the release said.
The homeownership rate for Black Americans rose to 47%, the highest since 2008, from 44%, the report said. A year ago, the rate for Black families was the lowest ever recorded.
The rate for Hispanics increased to 51.4%, the highest in data going back to 1994, from 48.9%, the Census report said.
The cheapest financing costs on record have widened the pool of people who qualify for mortgages, said Lawrence Yun, chief economist for the National Association of Realtors. Lenders qualify applicants by the amount of the monthly payment measured against their income, and when financing costs go down the payment shrinks.
“Lower rates always do a magic trick of bringing more buyers into the housing market,” Yun said in an interview.
The average U.S. rate for a 30-year fixed mortgage fell to an all-time low of 2.98% in mid-July, breaking the 3% threshold for the first time, according to Freddie Mac data. Last week, it was 3.01%, compared with 3.75% in the same week a year earlier.
Yun said he was expecting the homeownership rate to be higher because of the cheaper financing costs, but didn’t foresee a jump of 2.6 percentage points that would put the number back to a level last seen before the widespread foreclosures that followed the 2008 financial crisis.
“Usually homeownership data moves at more of a glacier-slow pace, so to see a sudden move like this was quite surprising,” Yun said. “Some of this increase could be due to the change in data measurement.”
The Census Bureau announced the change in data collection at the top of the report and linked to a five-page statement outlining the new methodology. The homeownership numbers are contained in the report known as the Current Population Survey/Housing Vacancy Survey, or CPS/HVS.
In the past, the bureau relied on workers who would go out and knock on doors to see what share of the housing stock was vacant, and they would interview people who came to the door to ask if they were homeowners.
“The coronavirus pandemic affected data collection operations for the CPS/HVS during the first and second quarters of 2020,” the Census Bureau said in the statement. “Data users should understand and consider these changes in data collection operations when interpreting the CPS/HVS estimates for the first and second quarters of 2020.
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📉 1. Borrowing Becomes Cheaper Mortgage rates tend to fall, making it easier for people to buy homes or refinance. Car loans, personal loans, and credit cards may also have lower interest rates. Businesses can borrow more cheaply to invest in growth. 💸 2. Consumer Spending Increases Since borrowing is cheaper and savings earn less interest, people are more likely to spend money rather than save it. This can boost demand for goods and services, helping to stimulate economic activity. 🏦 3. Savings Yield Less Savings accounts, CDs, and bonds typically offer lower returns. This can push investors to move money into riskier assets like stocks or real estate in search of higher returns. 📈 4. Stock Market Often Rallies Lower rates can mean higher corporate profits (due to cheaper debt) and increased consumer spending. Investors may shift funds from bonds into stocks, driving up equity prices. 💵 5. The U.S. Dollar May Weaken Lower interest rates can make the dollar less attractive to foreign investors, potentially weakening the currency. This can help U.S. exporters (as their goods become cheaper abroad) but may also increase the cost of imports. 🧩 6. Inflation Could Rise More spending and borrowing can increase demand, which may push prices up, leading to higher inflation—especially if supply can’t keep up. 🏚️ 7. Real Estate Activity Tends to Pick Up Lower mortgage rates can boost homebuying, refinancing, and construction, which helps stimulate related industries. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Mortgage purchase applications are on a 22-week growth streak primarily due to a combination of improving market conditions, seasonal trends, and changing consumer behavior. Here's a breakdown of the key reasons behind the sustained growth: 🔑 1. Falling Mortgage Rates Mortgage rates have been gradually declining from the highs seen in 2023. Even small drops in interest rates significantly improve affordability, prompting more buyers to apply for loans. Borrowers are locking in rates with the hope that they’ve hit a local low. 🏡 2. Pent-Up Demand from 2023 Many potential buyers delayed purchases during 2023 due to high rates and limited inventory. As conditions improve, backlogged demand is being released into the market. 🌞 3. Spring & Summer Buying Season The U.S. housing market typically sees a seasonal increase in purchase activity starting in spring and continuing through summer. Families prefer to move during school breaks, contributing to more applications in this window. 💼 4. Improved Inventory Levels While still tight, housing inventory has started to improve slightly in some regions. Builders are offering incentives and new constructions are increasing, drawing more buyers into the market. 📈 5. Confidence in the Economy A strong labor market and steady wage growth are boosting consumer confidence , encouraging people to buy homes. Some buyers are moving before potential rate hikes or home price increases . 💡 6. Shift Toward Homeownership Rising rents and lifestyle changes post-pandemic are pushing many toward owning rather than renting . First-time homebuyers are a large portion of this demand. Summary: The 22-week growth streak in mortgage purchase applications is being driven by lower mortgage rates, seasonal buying trends, improved inventory, and returning buyer confidence . While challenges like affordability and supply remain, these positive signals suggest a slow but steady rebound in the housing market .
During the mortgage process, several disclosure documents are provided to help you understand the terms of the loan, your rights, and the costs involved. These disclosures are required by law and are designed to promote transparency and protect you as a borrower. Here’s a breakdown of the key disclosures you'll receive: 1. Loan Estimate (LE) When: Within 3 business days of submitting a loan application. Purpose: Provides a summary of the loan terms, estimated interest rate, monthly payment, closing costs, and other fees. Key sections: Loan terms (rate, type, prepayment penalty, balloon payment) Projected payments (principal, interest, taxes, insurance) Costs at closing (origination charges, services you can/cannot shop for) Why it matters: Lets you compare offers from multiple lenders. 2. Closing Disclosure (CD) When: At least 3 business days before closing. Purpose: Provides final details of the mortgage loan, including actual costs. Key sections: Final loan terms (rate, payments, closing costs) Cash to close (how much you need to bring to closing) A detailed breakdown of costs and payments over time Why it matters: Helps you confirm everything is accurate before you close. 3. Mortgage Servicing Disclosure Statement When: Within 3 business days of application. Purpose: Explains whether your loan might be sold or transferred to another company for servicing. Why it matters: Tells you who will manage your payments and account. 4. Affiliated Business Arrangement (AfBA) Disclosure When: At the time of referral to an affiliated business (e.g., title company). Purpose: Discloses any relationships between the lender and other service providers and explains you’re not required to use them. Why it matters: Ensures you know if there’s a potential conflict of interest. 5. Home Loan Toolkit (for purchase loans) When: Within 3 business days of application. Purpose: A consumer-friendly booklet from the CFPB that explains the mortgage process, costs, and how to shop for a loan. Why it matters: Helps first-time buyers understand the steps and choices. 6. Right to Receive a Copy of Appraisal When: Within 3 business days of application. Purpose: Notifies you that you can get a copy of the appraisal at no additional cost. Why it matters: Gives you insight into the value of the home you’re buying or refinancing. 7. Initial Escrow Disclosure When: At or within 45 days of closing. Purpose: Details amounts to be collected in escrow for taxes and insurance. Why it matters: Shows how your monthly mortgage payment is allocated. 8. Notice of Right to Rescind (for refinances only) When: At closing (for primary residence refinances). Purpose: Gives you 3 business days to cancel the refinance loan. Why it matters: Protects you from making a rushed decision. tune in and learn at https://www.ddamortgage.com/blog Didier Malagies nmls#212566 dda mortgage nmls#324329
