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HOMEOWNERSHIP RATE CONTINUES TO SLIP By Mark Lieberman, Economist for the Five Star Institute The number of households owning homes rose to 75,209,000 in the fourth quarter of 2012, up from 75,076,000 in the third, but down from 75,315,000 a year ago, the Census Bureau reported in late January. At the same time, the nation���s homeownership rate (seasonally adjusted) dipped to 65.4 percent in the fourth quarter from 65.5 percent in the third quarter. At 65.4 percent���the same level as the first quarter of 2012���the homeownership rate is at its lowest level since the first quarter of 1997 when the rate was also 65.4 percent. The national homeownership rate peaked at 69.2 percent in Q2 2004. The rate measures the proportion of households owning their primary residence, computed by dividing the number of houses occupied by owners by the total number of occupied homes. The Census Bureau also reported the homeowner vacancy rate remained at 1.9 percent in Q 4 2012, the lowest level since Q 3 2005. The homeowner vacancy rate is the proportion of the vacant homeowner inventory for sale. The rental vacancy rate in the fourth quarter ticked up to 8.7 percent from 8.6 percent in Q 3, but fell from 9.4 percent in Q 4 2011. The number of housing units for sale in the fourth quarter, the Census Bureau reported, was 1,498,000, down from 1,783,000 in Q 4 2011, confirming assertions by the National Association of Realtors of weak inventories. The number of housing units held off the market in the fourth quarter was 7,299,000, up 26 from 7,190,000 in the third quarter and 7,122,000 a year earlier. The stagnant homeownership rate combined with a decline in the number of units held off the market suggests opportunities for home sales. At the same time, the profile of homeowners, by age, is changing. The homeownership rate for older Americans���65 and over���dipped in the fourth quarter of 2012 to 80.7 percent, the lowest rate in three years. The homeownership rate for those under 35 rose to 37.1 percent, its highest level in a year after falling for three straight quarters. The homeownership rate for those under 35 was as high as 43 percent in Q 3 2006. According to the quarterly report, the number of housing units in the fourth quarter was 132,961,000, up from 132,839,000 in the third quarter, which is an increase of 122,000 from the quarter and 486,000 in the last year. According to the Census Bureau, 17,927,000 units were vacant, down from 18,145,000 in the third quarter and 18,389,000 a year earlier. The median asking sale price for a vacant home rose to $137,700, up from $137,000 in Q 3 2012 and $133,800 in Q 4 2011. The highest homeownership rate in the fourth quarter was in the Midwest���69.7 percent, up from 69.6 percent in the third quarter. The homeownership rate in the West fell to 59.5 percent from 60.1 percent. The rate in the South rose to 67 percent in the fourth quarter from 66.9 percent in the third, and in the Northeast, it was unchanged at 63.9 percent. ADMINISTRATION REPORTS ON MODS, FORECLOSURES IN JANUARY During the month of January, 14,500 homeowners received permanent mortgage modifications through the Home Affordable Modification Program (HAMP), while 53,100 homeowners lost their homes to foreclosure, according to the latest Housing Scorecard from the Obama administration. At the same time, 14,500 homeowners entered into trial modifications through HAMP, and 72,500 homes entered the foreclosure process. Proprietary modifications continue to outpace HAMP. HOPE Now reported 62,200 mortgage modifications completed in January. Also in January, the Federal Housing Administration (FHA) completed 39,200 loss mitigation actions, and the Home Affordable Refinance Program completed 81,600 refinances. Combined, HAMP, FHA, and HOPE Now have reported more than 6.1 million mortgage assistance actions since April 2009, while just more than 3 million foreclosures have taken place. ���Making Home Affordable has directly helped more than 1 million homeowners avoid foreclosure and indirectly helped millions more by promoting critical changes in the way the mortgage industry assists struggling homeowners,��� said Tim Massad, assistant secretary for financial stability at Treasury. Since its initiation, HAMP has provided more than 1.1 million homeowners with permanent mortgage modifications. These homeowners save an average $545 on their monthly mortgage payments. About 87 percent of homeowners who enter the program receive a permanent modification, and about 94 percent of those are current on their modified loan after six months. While HAMP claims fewer modifications than the private sector, the administration reports modifications through HAMP ���continue to exhibit lower delinquency and re-default rates than industry modifications as reported by the Office of the Comptroller of the Currency.��� ���The housing market has clearly bottomed out nationally and is turning a corner with new home construction increasing to a level not seen since June 2008 and home prices showing strong gains,��� said Kurt Usowski, deputy assistant secretary for economic affairs at HUD. Home sales continue to rise, with new home sales up 8.8 percent since December 2011 and existing-home sales up 12.8 percent. Home prices rose 5 percent over 2012. Usowski, however, acknowledges, ���with so many households still struggling, we have important work ahead.���