The homeownership rate has weakened to its lowest level since 2003. This indicator shows that the housing market is in trouble, a dilemma which can be highly attributed to the mortgage industry’s stricter policies in granting mortgage.

The Census Bureau released a report saying that the share of American households that owning their own homes at 68.4% in the second quarter. The homeownership rate, which peaked at 69.4% three years ago, has declined steadily over the last three quarters, on a seasonally adjusted basis. This plight can extend further over the next two years as economist predicted.

The other part of the report did not contain any bit of good news for the housing market: The number of vacant homes for sale dipped to 2.04 million in the second quarter from a record 2.18 million in the first quarter. Vacancies are still rising.

The decline in the homeownership rate is partly the result of stricter credit making it difficult to buyers secure a mortgage and buy their home. This is especially true with first time buyers who generally have a hard time in putting up the down payment. Lenders have also sharply cut back on loans to subprime borrowers, or those with poor credit.

The homeownership rate began climbing in the mid-1990s. This is a result of moderate interest rates and strong economic growth during those times. It moved higher still in the earlier part of this decade as a result of low interest rates, ingenious mortgage financing and the desire of many Americans to get in on the housing boom.

But in recent times, Americans owning their homes began to drop as affordability made it tougher for some would-be buyers to get into the market.