The percentage of United States citizens who own their own home has been declining in recent years, according to the recent "State of the Nation's Housing" report by the Joint Center for Housing Studies of Harvard University. The report says single-family home construction is near a historic low point and home sales have slowed as the homeownership rate has dropped.

"Perhaps the most telling indicator of the state of the nation's housing is the drop in the homeownership rate to just 64.5 percent last year," said Chris Herbert, the managing director of the Joint Center for Housing Studies. "This erases nearly all of the increase from the previous two decades. In fact, the number of homeowners fell for the eighth straight year, and the trend does not appear to be abating."

However, interest in homeownership remains high. Younger buyers are expected to enter the market in greater numbers over the next decade.

The State of the Nation's Housing report has been issued each year since 1988. The principal funding for the report is provided by The Ford Foundation and the Policy Advisory Board of the Joint Center for Housing Studies, with additional support provided by several other real estate organizations. The data for the report is derived from numerous sources, including the U.S. Census Bureau, the Department of Housing and Urban Development, Fannie Mae, the National Association of Realtors, and the Mortgage Bankers Association of America.

Homeownership

The national homeownership rate declined for its 10th year in a row. In addition to a rate of 64.5 percent for 2014, the first quarter reading for 2015 stood at 63.7 percent. This share marked the lowest level recorded by the report since 1993.

Residents between the ages of 35 and 44 have had the most significant decline in homeownership, with this rate down 5.4 percent from the 1993 level. The report also indicates that the number of homeowners between the ages of 35 and 39, considered a prominent age group for buying a new home or trading up, is 23 percent lower than it was a decade ago.

Sales of new single-family homes increased 2 percent in 2014, but this was a markedly slower pace than in 2013, when new single-family home sales went up by 13 percent. Sales of existing homes fell 3 percent between 2013 and 2014. The report says April of 2015 was the 32nd month in a row where existing homes for sale were below the six-month supply, which is traditionally used as a measure of a balanced market.

Single-family home construction has increased, but remains below the pace of multifamily home construction. Starts for single-family homes in 2014 were 5 percent higher than the previous year, with slightly more than 1 million new homes under construction in 2014. However, this is the lowest annual total in the past 50 years outside of the construction slowdown related to the Great Recession. Multifamily home construction starts increased by 16 percent, with more of this type of home built in 2014 than in any year since 1989.

Despite the low levels of new home construction, the size and value of new homes has been increasing. The median square footage of a new home increased 12.5 percent between 2009 and 2013, while the median sales price for this kind of home reached a record high of $283,000 in 2014.

Existing home sales prices have also gone up, although their median price is 35 percent below that of new homes. The sales price for an existing home rose for the third year in a row in 2014, increasing 4 percent to $208,300.

More positive indicators include a decline in existing mortgage debt and increased homeownership eligibility among those affected by the Great Recession. The total mortgage debt in the United States in 2014 was about $9.4 trillion, a 2 percent drop from 2013 and 13 percent below 2010.

However, more older homeowners are entering retirement age with outstanding debt on their mortgage. Thirty-eight percent of homeowners above the age of 65 had mortgages in 2013, an increase of about one-quarter since 2001.

Almost 1 million homeowners who suffered a foreclosure in recent years have restored their credit rating, making them eligible for new home loans. Another 1.5 million are expected to reach this eligibility within a few years.

Future homeowners

The report anticipates that an annual nationwide household growth of 1.2 million will occur in the next decade. It says the Millennial generation, defined in this study as those born between the years of 1985 and 2004, will drive much of this growth. This generation, which has about 86 million people, is expected to form about 30 million new households.

Over the next decade, many Millennials will leave the 20-24 age group where only about a quarter of residents live independently. About half of the 30-34 age group lives on its own.

Part of the anticipated growth will be driven by immigrants and minorities. Currently, the homeownership rate for minorities is 25.5 percent below that of white adults; however, minorities are predicted to account for 76 percent of net household growth in the next decade and 85 percent of net household growth in the next 20 years. The report says immigration is expected to reach 1.4 million a year by 2035.

One reason for this predicted trend is that minorities make up a larger share of the Millennial generation. For example, Hispanics account for 22 percent of this age group, compared with 19 percent of Generation X (born between 1965 and 1984) and 10 percent of the Baby Boomer generation (born between 1946 and 1964).

Aging Baby Boomers will lead to a significant increase in the number of older households, with adults over the age of 70 increasing by 91 percent over the next 20 years. This trend will lead to a higher demand for affordable and accessible housing.

Home loans

People with higher credit scores were much more likely to apply for a mortgage, with a 9 percent increase in borrowers with scores above 720 between 2001 and 2013. During the same period, the share of borrowers with scores between 660 and 720 fell 37 percent.

In 2001, 44 percent of home loans were issued to borrowers with top credit scores. This share increased to almost 62 percent in 2013. Nearly 41 percent of borrowers in 2013 said they had refinanced their loan, with most of these actions taking place within the previous five years.

The report says minorities faced additional challenges in getting a home loan. While 12 percent of applicants in 2013 were denied financing, 20 percent of black applicants and 17 percent of Hispanic applicants were rejected. More than 40 percent of black and Hispanic borrowers reported mortgage interest rates above 5 percent, but less than one-third of white and Asian borrowers said they were paying such a rate.

Most Americans aspire to own a home, despite the associated challenges. In Fannie Mae's National Housing Survey at the end of 2014, 92 percent of renters between the ages of 18 and 39 expect that they will own a home.

Eighty-two percent of respondents and 67 percent of renters said they believe owning a home would be a wiser financial decision than renting. However, 62 percent of renters between the ages of 18 and 39 said they thought it would be difficult for them to get a mortgage.

Equity

Equity in a home accounted for most of a homeowner's net worth, with $80,000 of a median homeowner's net wealth of $195,500 coming from a home's value. By contrast, a renter's median net wealth was $5,400.

The share of homeowners with underwater mortgages, or outstanding mortgages higher than the home's value, has gone down. While more than one in four homeowners had an underwater mortgage in 2011, this share dropped to 10.8 percent at the end of 2014.

Homeowners with less valuable homes were more likely to have an underwater mortgage. Sixteen percent of homeowners with a residence valued at less than $200,000 were underwater, while only 6 percent of homeowners with higher valued homes had this issue.

The report says homeowners who have low equity are in a more difficult situation because they are less likely to be able to cover the costs of selling the home. In addition, they may not qualify for the financing necessary to renovate the home or otherwise improve its value.

Homes with negative equity were largely concentrated in neighborhoods with low income levels or a significant share of minority homeowners. The 10 percent of ZIP codes with the highest levels of negative equity had an average minority share of 51 percent, while income levels in these areas were 17 percent below the state median.

In addition, 29 percent of black homeowners and 25 percent of Hispanic homeowners had negative equity. By comparison, 16 percent of white and Asian homeowners were underwater on their mortgage.