This article was originally published on ETFTrends.com.
Homebuilders stocks and sector-related ETFs led the charge on Tuesday as the homeownership rate in the U.S. gains momentum.
Supporting the gains in the homebuilder sector, the Census Bureau revealed the homeownership rate was 64.4% in the third quarter, compared to 64.3% in the prior three months and 63.9% a year earlier, Bloomberg reports.
The steady price gains in the housing sector over the past six years are starting to slow, potentially allowing more buyers to bid on houses without resorting to a pricey bidding war.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, was up 5.8% in the year ended in August, compared to a 6% year-over-year rise reported in July. The measures was also the first time in a year that annual price gain fell below 6%, the Wall Street Journal reports.
Latest on Mortgage Rates
The rise in rates has also pushed up mortgage rates, which also pressured demand in recent months.
Tian Liu, chief economist at Genworth Mortgage Insurance, argued that with a large population of Americans under 45, the home ownership rate could still rise as renters turn into first time home owners.
“There is a benefit to potential first-time buyers in the market today: There is less competition for available homes,” Liu told Bloomberg. “Now, they may be able to afford - through slower home-price growth - a more desirable home than before.”
Home buyers “must be breathing a collective sigh of relief that home price growth finally has slowed.” Skylar Olsen, director of economic research and outreach for Zillow Research, told the WSJ, adding that the slowing appreciation “is a sign that fierce competition is dying down.”
Among Americans under the age of 35, homeownership rate rose to 36.8% in the third quarter from 35.6% a year earlier. The rate for the 35-to-45 age range was 59.5%, compared to from 59.3% a year earlier.
For more information on the housing market, visit our homebuilders category.
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