U.S. Housing Vacancies Reach Record Levels

In the latest sign of weakness in the housing market, there are a record number of homes sitting vacant and for sale in the United States, and the percentage of Americans owning a home has slipped slightly.

A U.S. Census Bureau report Friday indicated that there are a record 2.18 million homes for sale in the first quarter which were not occupied, up 4 percent from the record levels seen in the fourth quarter, and 38 percent higher than levels seen a year earlier.

According to the new report, 2.8 percent of all residential real estate is vacant. That’s up from 2.7 percent a quarter earlier and from 2.1 percent in the first quarter of 2006.

When properties sit empty, the owners are more motivated to make a sale and more likely to drop home prices, affecting prices for the entire market.

It was the eighth consecutive quarter of increasing home vacancies and the highest percentage of vacant properties since the U.S. Census Bureau began compiling statistics on them in 1956.

Even with mortgage rates near record lows, ownership has fallen slightly over the past year to 68.4 percent of all households, down from 68.9 percent in the previous period.

The record high ownership rate of 69.2 percent was reached in the fourth quarter of 2004, at the peak of the much-discussed, now deflated boom in home loans and purchases.

Mike Larson, real estate analyst for Weiss Research, an investment adviser in Jupiter, Fla., attributes much of the increase to the side effects of the bust in speculation, much of it in the condo market.

It’s clearly a reflection of the condo boom that had hit many markets, he says, such as Miami, Phoenix, Las Vegas and more. There is a lot of excess inventory and prices too high for prospective home mortgage seekers.

Cities and suburbs recorded the highest rates of vacancies with 4 percent of homes in principal cities vacant (up from 2.5 percent a year ago) and 2.4 percent of homes in suburbs (up from 1.8 percent).

The areas outside major metropolitan areas recorded a vacancy rate of 2.2 percent, unchanged from the first quarter of 2006.

Regionally, the South had the highest rate of vacancy, at 3.2 percent. The Northeast’s rate was the lowest, at 1.9 percent.

SOURCE: CNN Money