The homeownership rate fell to the lowest level since 1997 during the first quarter of this year, hitting 65.4%, according to data released today by the U.S. Census Bureau in its quarterly housing vacancy report.

During the same quarter, rental properties filled up at a faster pace than owner-occupied units, although both categories saw vacancies decline, with homeowner inventory vacancies down 0.4 percentage points to 2.2%; and rental vacancies down to 8.8%—the lowest reading in a decade—from 9.7% the previous year.

All told, vacancies declined to 18.5 million units or 13.9% of total U.S. housing stock, from 14.3% a year earlier. Owner-occupied units made up 56.3% of the total housing stock, down 0.7% from the first quarter of 2011, while renter-occupied units increased in ranks by 4.0% to make up 29.8% of the total.

Prices reflected the shift as the median asking price for vacant rental units moved up from last quarter and year-over-year to $721 per month. The median price for vacant for-sale units was down on both a quarterly and yearly basis to $133,700.

"Although house prices and mortgage rates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage," wrote Paul Diggle, property economist at Capital Economics, in a note discussing the numbers today.

Still, the report wasn’t entirely bleak, says Adam Rudiger, a senior analyst at Wells Fargo, pointing to the report's improvement in overall occupancy. "It’s the most robust household formation we’ve seen since the third quarter of 2006 on a year-over-year basis," he said on a call with Builder today. "Yes, owners were down, renters were up. But still, any household formation is a positive."

And, given how depressed new-home construction is, "you could see construction grow at a healthy clip—20% or 30% over the next couple years—and still see the homeownership rate decline," he says.

That’s good news for builders, since there’s a good chance the homeownership rate will continue to fall, perhaps to 64%, wrote Patrick Newport, U.S. economist at IHS Global Insight, in a note today, adding that "many of the 6 million homeowners delinquent on their mortgages will eventually become renters."

"The housing market is slowly moving to a new long-run equilibrium," he wrote, "one with a lower homeownership rate and fewer vacant homes for sale, with housing starts above the 1.5 million mark and housing prices rising. Given the number of homeowners underwater or delinquent on their mortgage payments or both, it may take two or three years to reach equilibrium. The landscape, however, is inexorably changing."

To see the Census Bureau’s full report, click here.

Claire Easley is a senior editor at Builder.

Learn more about markets featured in this article: Greenville, SC.