The U.S. homeownership rate fell to its lowest level in 20
years at the end of 2014—a level last seen when national leaders embarked on a
broad push to expand homeownership in the mid-1990s. Estimates published
Thursday show that, after adjusting for seasonal factors, 63.9% of U.S.
households owned their homes in the fourth quarter, a rate last recorded in
1994, according to the Commerce Department. Homeownership hasn’t fallen below
that level since 1988. The rate stood at 65.1% at the end of 2013.
The report showed that household formation grew over the
past year at the fastest pace since 2005, according to J.P. Morgan Chase, which
could indicate that an improving economy is finally encouraging more young
Americans to strike out on their own.
The homeownership rate has fallen steadily since 2005, when
it peaked at 69.2%. That followed a decadelong campaign to expand
homeownership, launched by President Bill Clinton in 1995 and embraced by President
George W. Bush in the early 2000s.
Rampant real estate speculation and loose lending standards
inflated housing bubbles across the country, and when prices collapsed,
millions of Americans faced foreclosure, triggering the financial crisis. Over
the past year, President Barack Obama and other administration
officials have voiced alarm that lending has gone from one extreme during the
bubble—too loose—to the other—too tight—in the aftermath of the bust.
Officials have walked a fine line to prevent a return of the
reckless loan products and practices that allowed the bubble to inflate 10
years ago while loosening some standards elsewhere to provide broader access to
home buyers without strong credit or big down payments.
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