The U.S. homeownership rate hit the highest level in 12 years during the second quarter, at the height of the coronavirus pandemic.
But the gain could be a data collection fluke.
The rate grew to 67.9% in the second quarter, the highest since the third quarter of 2008 and up from 65.3% in the first quarter, according to the Census Bureau. The 2.7-percentage-point jump was also the largest on record.
But the bureau said the rate could have been affected by the data collection methods in the second quarter, which relied on only telephone surveys and no in-person interviews, which were suspended on March 20 due to the COVID-19 outbreak. As a result, the response rate was 12 percentage points lower than in the first quarter.
“If response rates declined further among rental units than homeowner units, the effects... would be a lower estimate of the number of rental households, a higher estimate of the number of homeowner households, and a higher estimate of the homeownership rate," the bureau said in a special FAQ that accompanied the second-quarter results.
"Data users should therefore exercise caution when comparing the second quarter estimates to previous quarters, interpreting the differences between quarters to reflect both the effects of the COVID-19 pandemic and the effects of changes in data collection procedures," the bureau concluded.
‘There is a longer-run demographic shift’
Still, experts said an increase in the rate would not have been out of line of the recent trend in increasing homeownership, largely because of millennials taking advantage of low mortgage rates.
“The takeaway is that, if we set aside data collection changes, there is a longer-run demographic shift from renting to home buying that is driven by millennials,” said Odeta Kushi, deputy chief economist for First American Financial Corp, a financial services firm. “Buying a home is a financial decision and what’s helping this financial decision for younger households is historically low mortgage rates.”
Last week, the rate on the 30-year mortgage was 3.01%, just barely higher than the all-time low of 2.98% it hit in the prior week, according to Freddie Mac.
“As the majority of millennials turn 30 this year and are forming their own households, they [rushed] to capture cheap financing and low mortgage rates,” Kushi said. “I wasn’t surprised, as prior to the pandemic, they were taking advantage of low rates, too.”