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Rental vacancy rate hits 38-year low during Q4 2021

Homeownership rate remains above pre-pandemic levels

The national vacancy rate for rental housing dropped 0.9 percentage points during the fourth quarter of 2021 to 5.6%, according to data published by the U.S. Census Bureau on Wednesday.

The vacancy rate for homeowner housing dropped just 0.1 percentage point year over year to 0.9%. Both rates were virtually the same as they were in the third quarter.

Rental vacancy rate was highest outside metropolitan statistical areas (MSAs) at 7.7%, followed by a 5.7% vacancy rate in principal cities and a 5.1% vacant rate in the suburbs.

On the homeowner side of things, the vacancy rate in the suburbs was 0.7%, followed by a rate of 1.1% in the principal cities and 1.0% outside the MSAs.

The South had the highest rental vacancy rate at 6.9%, followed by the Midwest (6.5%), the Northeast (4.3%) and the West (4.0%). The rates in the Northeast, Midwest and West are lower than they were a year ago, but the rate in the South was not statistically different.

The Midwest and the South both had homeowner vacancy rates of 0.9%, followed by the Northeast with a rate of 0.8% and the West with a rate of 0.7%. The rates in the Northeast and the South were lower than a year ago, but the rates in the Midwest and the West were not statistically different than the fourth quarter of 2020.

During the fourth quarter of 2021 the homeownership rate rose 0.1 percentage point from the third quarter to 65.5%, but it was still 0.3 percentage points lower than a year prior. Despite this, the homeownership rate is still above pre-pandemic levels.

Regionally, the homeownership rate was highest in the Midwest (70.1%), followed by the South (67.3%), the Northeast (62.4%) and the West (60.5%).

Householders aged 65 years and older had the highest homeownership rate during Q4 at 79.4%, while householders under the age of 35 had the lowest rate at 38.3%.

“Millennials are still aging in large numbers into the lifestyle decisions that are correlated with the decision to buy a home,” First American deputy chief economist Odeta Kushi said in a statement. “There is a longer run demographic demand shift away from renting to home owning driven by millennials aging into homeownership.”

By race, the homeownership rate for non-Hispanic White Alone householders reporting a single race was highest at 74.4%, followed by Asian, Native Hawaiian and Pacific Islander Alone householders with a rate of 61.2%, and Black Alone householders with a rate of 43.1%. These rates were not significantly different from the fourth quarter 2020 rates.

Overall, roughly 89.5% of housing units in the U.S. were occupied during the fourth quarter of 2021 and 10.5% were vacant. Owner-occupied housing units constituted 58.6% of total housing units and renter-occupied units made up 30.9% of housing inventory, with units that were vacant year-round making up 7.9% and units vacant for seasonal use making up 2.6%. Roughly 1.9% of the total housing units were vacant for rent, 0.5% were vacant for sale only and 0.7% had been rented or sold but were not yet occupied.

“The issue is supply – you can’t buy what’s not for sale,” Kushi said in a statement. “The rental vacancy rate in the fourth quarter of 2021 hit a 38-year low, while the homeowner vacancy rate remained at the lowest level in the series’ history. Our analysis shows that in the fourth quarter of 2021, the housing deficit increased and is now about 1.76 million units.”

During the fourth quarter of 2021, the median asking rent for a vacant rental unit was $1,207, while the median asking sales price for a vacant sale unit was $239,000.