Marginal increase in vacancy rate
The homeowner vacancy rate is the proportion of the homeowner housing inventory that is vacant and for sale. The rate was 1.9% in the quarter ended December compared to 1.8% in the previous quarter. On an annual basis, the vacancy rate fell by 9.52%, down from 2.1% in the last quarter of 2013.
The homeowner vacancy rate in the December quarter was higher than the long-term average of 1.57%, though much lower than 2.9%, the historical peak that was recorded in 2008.
A low vacancy rate indicates a tight housing market in which demand for owner-occupied units is high relative to supply.
Looking at metropolitan statistical areas
The homeowner vacancy rate within metropolitan statistical areas, or principal cities, dropped to 2.1%, but was still higher than the 1.8% rate reported in the suburbs of these cities. The rate in the suburbs surrounding principal cities was unchanged over last year’s rate, as was the 2% homeowner vacancy rate reported in other cities.
In the last quarter of 2014, the homeowner vacancy rate in the South was 2.2%—higher than the 1.7% rate in the Midwest and close to the Northeast’s 2% rate. The West reported a 1.4% homeowner vacancy rate, the lowest in the country.
In the Midwest, the homeowner vacancy rate was lower than it has been the previous year. Meanwhile, the rates in the Northeast, the South, and the West were almost unchanged.
Long-term investors in homebuilder stocks such as KB Homes (KBH), Standard Pacific (SPF), and Pulte Group (PHM) can diversify their holding by investing in ETFs such as the SPDR S&P Homebuilders ETF (XHB) and the iShares U.S. Home Construction ETF (ITB). XHB has a three-year return of 72.3%, and ITB’s is 86.4%.