Misleading comparisons of homeownership rates between groups and over time: the effects of variable household formation

Despite ominous signs of housing market stress, the homeownership rate reached an all time high in 2006. We seek to understand whether the conventional definition of homeownership, which is based on the share of households and ignores the effects of variable household formation, has confounded the assessment of owner-occupied housing. We find that, from 1990 to 2000 and especially from 2000 to 2006, declining household formation led to an elevated homeownership rate in the U.S.