Home market

The American dream of homeownership is fading.

Hit by job losses, foreclosures and excessive mortgage hikes, the two-thirds of Americans owning their own place in the fourth quarter of last year has fallen to the same level it was at in the second quarter of 2000.

Homeownership reached a high of 69 percent in 2004. Prospective buyers took advantage of lax lending standards, easy credit, enticing low entry-level interest rates and minimal-to-no down payments.

Then the recession hit, and the home market plummeted. Homeowners were stunned by sudden, unaffordable interest rate increases. Unemployment took its toll. Home values plunged. Homeowners found themselves owing more than their homes were worth. Nearly 4 million homes were foreclosed on between 2007 and 2009.

The declining trend in homeownership was stemmed somewhat by the federal tax credit for first-time buyers that helped home sales outpace foreclosures. Without that, the homeownership rate would have fallen even more. An extension and expansion of the credit to existing homeowners may help sustain the current level as indicated by another measure.

One encouraging note in the market is the pending sales of previously owned homes, meaning sales with a signed contract waiting to be closed. They were up about 1 percent in December, suggesting the market might be stabilizing.