The rate of homeownership in the United States experienced a significant decline in the first quarter of 2025, according to recent data. This drop marks the lowest point in several years, signaling potential shifts in the housing market landscape.

Sharp Quarterly and Annual Decline

In the first quarter of 2025, the U.S. homeownership rate fell to 65.1%. This represents a decrease of 0.6 percentage points compared to the fourth quarter of 2024 and a 0.5 percentage point decrease from the same period in the previous year. This latest figure is the lowest homeownership rate recorded since the fourth quarter of 2019. While the rate saw a temporary increase in early 2020, it had largely stabilized in the mid-65% to 66% range throughout the COVID-19 pandemic and the subsequent years. The recent downturn is likely linked to ongoing challenges with housing affordability and a limited supply of affordable housing options. Despite an annual increase in inventory levels, the number of homes available for sale remains below pre-pandemic figures, continuing to exert upward pressure on prices.

Vacancy Rates Show Divergent Trends

The homeowner vacancy rate remained steady at 1.1% in the first quarter of 2025, consistent with the previous quarter but 0.3 percentage points higher than a year prior. The fact that homeowner vacancy stayed below 1% for a significant period prior to the recent increase underscores the previous scarcity of for-sale inventory. While recent inventory gains have contributed to the higher vacancy rate, the number of vacant homes still remains lower than pre-pandemic averages.

Conversely, the rental vacancy rate saw an increase, reaching 7.1% in the first quarter of 2025. This is the highest rental vacancy rate since the third quarter of 2018, marking a 0.2 percentage point increase from the previous quarter and a 0.5 percentage point increase from the previous year. This loosening of the rental market could provide some relief for renters facing historically high rental costs in many parts of the country. Notably, rental vacancy was even higher within principal cities at 7.5%, while suburban areas recorded a rate of 6.8%, and areas outside of metropolitan areas had a rental vacancy of 6.4%.

Regional Variations in Vacancy

Regional analysis reveals that the South had the highest rental vacancy rate at 8.6%, followed by the Midwest at 7.6%, the West at 5.9%, and the Northeast at 5.1%. All four regions experienced an annual increase in rental vacancy. Homeowner vacancy followed a similar regional pattern, with the South leading at 1.3%, followed by the West at 1.1%, the Midwest at 0.9%, and the Northeast at 0.6%. Interestingly, the Northeast was the only region to see a year-over-year decrease in homeowner vacancy. The South and West have generally seen inventory growth due to construction activity, while the Northeast has lagged in both new construction and affordability.

Shifts Across Racial and Ethnic Groups

Homeownership rates across different racial and ethnic groups showed relative stability year over year in the first quarter of 2025. The rate for White individuals was 74.2% (+0.2 percentage points year-over-year), for Black individuals was 44.7% (-1.0 percentage points year-over-year), for Hispanic individuals was 47.8% (-2.1 percentage points year-over-year), for Asian, Native Hawaiian, and Other Pacific Islander individuals was 62.0% (-0.2 percentage points year-over-year), and for all other races was 57.2% (-0.3 percentage points year-over-year). However, it is important to note that homeownership rates fell for all of these groups when comparing the first quarter of 2025 to the fourth quarter of 2024.

Declining Rates Among Younger Age Groups

Analysis by age group reveals a downward trend in homeownership rates for younger individuals in the first quarter of 2025, as they navigate challenging market conditions. The homeownership rate for those under 35 years old was 36.6% (-1.1 percentage points year-over-year), for those aged 35 to 44 was 60.3% (-1.1 percentage points year-over-year), for those aged 45 to 54 was 70.6% (-0.2 percentage points year-over-year), for those aged 55 to 64 was 75.2% (-1.1 percentage points year-over-year), and for those 65 and older was 79% (+0.3 percentage points year-over-year). The significant difference between the under-35 and 35-44 age groups aligns with data indicating that the typical age of first-time homebuyers is now 38. The decline in homeownership among the 35-and-under demographic has brought their rate to the lowest level seen since before the pandemic.

‍