Vacant Homes on the Rise as Homeownership Rate Falls to 2003 Level

Both rental and homeowner vacancy rates rose in the third quarter. The homeowner vacancy rate, at 2.7%, is just below the record high of 2.8% set in the first quarter of 2007. Rental vacancy rose from 9.5% in the second quarter to 9.8% in the third quarter. A high number of vacant homes is a strong indicator that there is still plenty of excess supply in the housing market, and will likely maintain continued downward pressure on house and rental prices.

Homeownership rates continued to decline, falling to 68.1% from 68.3% in the second quarter, the lowest level since 2003. The high was reached in 2005 at 69%. In absolute numbers, this quarter's decline indicates around 900k households moved from owning a home to renting on an annual basis. This is a large number in relation to new home sales, which are currently running at less than 800k annually.