Americans choose renting

Despite record-low mortgage rates and monthly prices on the rise, dwindling rental supplies indicate Americans are yet to wade back into home-ownership.

The Pulse is down today on news that even though 30-year mortgage rates hit another all-time low today -- just 3.91 percent according to lending behemoth Freddie Mac -- we still aren’t buying.

A couple weeks ago, the Commerce Department announced that, short of having an incredibly productive December 2011 would be the worst year for new-home sales on record. And while new homes make up only about 10 percent of total home sales, the housing market is simply not a happy place at the moment. In fact, to underline the point, it was just announced that 13.9 percent of people holding an advanced degree in architecture are unemployed.

With joblessness looming large, tough lending restrictions and uncertainty about finances on many Americans’ minds, it shouldn’t surprise anyone that we’re renting -- in droves.

Reis Incorporated, who tracks the real estate market, announced today that rental vacancies are at a 10-year low of just 5.2 percent. A year ago, 6.6 percent of all rentals were vacant, but despite increasing rents (they’re up 2.3 percent to an average of $1,009 per month nationwide), those who'd rather be month-to-month than committed for 30 years is still growing in number.

Economists predict even more mortgage rate reductions on the horizon. We’ll see if that wins hearts and minds in the war to get people buying again.

About the author

Joel Patterson is the Associate Producer of Marketplace Money.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...