Norada Real Estate Investments

Renting in the US: Vacancy Rates on the Rise

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Rental Vacancy Rates on the Rise

The rental vacancy rate in the United States ticked up in the third quarter of 2023, according to data from the U.S. Census Bureau. The rate climbed to 6.6%, up from 6.3% in the second quarter.

This increase could be due to a number of factors, including rising rents, a slowing economy, or a shift in renter preferences. Whatever the cause, the higher vacancy rate could mean more options for renters, but it could also put pressure on landlords to offer lower rents or concessions.

It will be interesting to see how the rental market evolves in the coming months. If the vacancy rate continues to rise, it could put downward pressure on rents. However, if the economy picks up, the vacancy rate could start to decline again.

In the meantime, renters should be aware of their options and negotiate with their landlords if they can. Landlords, on the other hand, may need to be more flexible with their pricing and terms in order to attract and retain tenants.

  • The vacancy rate is not the same in all parts of the country. Some areas, such as coastal cities, have much lower vacancy rates than others.
  • The vacancy rate for different types of rental units also varies. For example, the vacancy rate for apartments is typically lower than the vacancy rate for houses.
  • The vacancy rate is just one indicator of the health of the rental market. Other factors, such as rents and apartment turnover, also need to be considered.
Quarterly Residential Vacancies and Homeownership
Source: Census Bureau

Homeownership Vacancy Rate

The homeowner vacancy rate held steady at 0.8% in the third quarter of 2023. This is not statistically different from the rate in the third quarter of 2022 (0.9%) and higher than the rate in the second quarter of 2023 (0.7%).

The homeownership rate of 66.0% was virtually the same as the rate in the third quarter of 2022 (66.0%) and not statistically different from the rate in the second quarter of 2023 (65.9%).

Analysis of Rental and Homeowner Vacancy Rates (2020-2023)

The data provided by the U.S. Census Bureau shows the rental and homeowner vacancy rates for the United States from 2020 to 2023.

Here are some key observations:

Rental vacancy rates:

  • The rental vacancy rate has been steadily increasing since 2020, reaching 6.6% in the third quarter of 2023.
  • The highest rental vacancy rate was in the first quarter of 2021 (6.8%), while the lowest was in the second quarter of 2022 (5.6%).

Homeowner vacancy rates:

  • The homeowner vacancy rate has been relatively stable over the past four years, fluctuating between 0.7% and 0.9%.
  • The highest homeowner vacancy rate was in the first quarter of 2020 (1.1%), while the lowest was in the second quarter of 2023 (0.7%).

These trends suggest that the rental market may be softening, while the homeowner market remains tight. This could be due to a number of factors, such as rising rents, a slowing economy, or changes in renter preferences.

It is important to note that these are just national trends, and vacancy rates can vary significantly depending on the location. For example, vacancy rates tend to be higher in urban areas than in rural areas.

Additional insights:

  • The average rental vacancy rate in 2023 was 6.4%, which is higher than the average rate in 2020 (6.2%) and 2021 (6.2%).
  • The average homeowner vacancy rate in 2023 was 0.8%, which is lower than the average rate in 2020 (0.9%) and 2021 (0.9%).
  • The rental vacancy rate peaked in the first quarter of 2021 and has been declining since then.
  • The homeowner vacancy rate peaked in the first quarter of 2020 and has been relatively stable since then.

National Economic Outlook (May 28, 2010)

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The two large questions on the minds of are: when will the economy recover? and when is a good time to reinvest in the housing market? We think the economy has reached the point where aggressive investors can find good opportunities in selected housing markets. Although the national economy will just be creeping along for another couple of years and home prices will be weak, some local markets have enough long-term potential to warrant taking investment chances.

The latest bad news for the housing market is that the fall in home prices in the last four quarters was worse than expected, showing weak demand for housing and competition for from vacant properties. Overall, home prices fell almost 7 percent, whereas the fall for the four quarters of 2009 was 5 percent. Although the biggest drops were in Florida, California and other markets out West, the effect was felt across the country. The good news is that rental vacancy rates seem to have stabilized most everywhere, and are falling in large markets like Atlanta, Chicago and Miami. On balance, we seem to be looking at a housing situation where the downside in some local markets has become quite small.

Even though the economy grew at a 3 percent rate in the first quarter, the job situation has not improved very much, indicating a much longer recovery period. Over a million jobs were lost in the last 12 months, many in construction and manufacturing. We expect job gains during the next year, but in lower-paying areas such as retail trade and health care. And the number of temporary workers will continue to grow.

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