LOS ANGELES — Parents who’ve been waiting for their grown children to move out may finally be in luck.
The number of renter-occupied residences grew by 2 million last year, according to a report last week from the U.S. Census Bureau in Washington. Vacancy rates for rentals fell to 7 percent in the fourth quarter, the lowest since 1993, the data show.
A resurgent job market is enabling more members of the millennial generation to leave the nest. Along with its benefit to parents, the trend is good for apartment and single-family home landlords, who may be able to raise rents as demand increases faster than the supply of properties for lease.
There’s a “pent-up demand for housing that’s built up as young people waited longer to enter the housing market,” said Jed Kolko, chief economist for San Francisco-based real estate researcher Trulia Inc. “All of the reported household formation is new renter households.”
The number of owner-occupied households fell by 354,000 from a year earlier as the U.S. homeownership rate dropped to its lowest level since 1994, according to Census data. The ownership rate for people under age 35 fell to 35.3 percent, down 1.5 percentage points from a year earlier and the lowest level in Census data going back to 1982.
The increase in total households — 1.66 million — is the largest since 2005, according to Kolko, who said that quarterly data on housing vacancies and ownership rates is less reliable than Census reports that take longer to release.
The vacancy rate for owner-occupied properties declined 0.2 percentage points to 1.9 percent.
Demand for apartments will grow as “1 million households still could begin to unbundle,” AvalonBay Communities Inc. Chief Executive Officer Timothy Naughton said Thursday. His Arlington, Virginia, company is the biggest publicly traded apartment landlord after Equity Residential.
“We expect fundamentals in the apartment space to remain very strong,” he said.
U.S. renters paid $441 billion for apartments and houses in 2014, a $20.6 billion increase, as fewer Americans owned their homes and landlords with tight inventories charged more, according to data provider Zillow Inc.
Margaret Mooney, 27, this month moved out of her parents’ house to a three-bedroom Washington apartment she shares with a roommate. They’re looking for another tenant. Her share of the rent is $1,375, not including $85 for a parking space and about $100 for utilities.
“I finished my graduate degree and got a promotion,” said Mooney, a director at Collingwood Group, a housing-finance consulting firm. In October, she received a master of business administration degree from Mount St. Mary’s University in Emmitsburg, Maryland. “I got a pretty significant wage increase, so I was able to move out.”
Doing so let Mooney shave an hour from her round-trip commute each day. Having moved out, she’s learning to cook, and her parents are adjusting to life as empty-nesters.
“I was surprised how sad they were,” she said. “They were giving me a hard time about living with them for the last two years.”