Home-ownership rate ticked up in Q3 2011

The U.S. home-ownership rate had a surprise quarter-over-quarter rise in the third quarter of the year. The year-over-year trend is still down, however:

The nation's home-ownership rate ticked up in the third quarter, suggesting a three-year decline in home ownership may be starting to bottom out. The rental vacancy rate also rose, in a sign that rising rents could be reducing demand.

The Census Bureau reported Wednesday that the nation's seasonally adjusted home-ownership rate stood at 66.1% in the third quarter, up slightly from 66% in the previous quarter, though down from 66.7% a year earlier. The rental vacancy rate was 9.8%, up from 9.2% in the second quarter and down from 10.3% a year earlier.

Industry watchers warn against reading too much into results from a single quarter. The increase is small and the number could begin declining again in the fourth quarter, when colder weather means fewer Americans buy homes.

Paul Dales, a senior U.S. economist with Capital Economics, said he was initially surprised by the increase. "I don't think this alters the long term trends that have been going on," he said. "The overall housing market will remain weak and the rental market will remain strong."

As I've said before, the overall U.S. housing bubble is completely deflated, although we still have large local bubbles in the Northeast and West Coast. With rents rising nationally, I think it won't be long before the U.S. home-ownership rate hits bottom. I don't think we're there yet, though. There is still a large backlog of foreclosed homes we have to get through. Only after we get through the backlog will home builders start building again, and only after builders start building again will we have a true bottom in the U.S. home-ownership rate.