Homeownership is up, but minorities continue to lag behind
A new NAR report finds that homeownership has increased over the past decade, but Asian, Hispanic, and especially Black Americans face more hurdles.
Key points:
- The overall homeownership rate notched up from 63.9% to 65.2% between 2012 and 2022.
- Racial disparities are notable, however: The homeownership rate for white Americans is 73.3% vs. 63.3% for Asians, 51.1% for Hispanics and 44.1% for Blacks.
- Housing affordability and income gaps make it harder for minorities to save and buy a home.
People of color achieved historic homeownership rates in 2022 despite fast-rising mortgage rates, but there is still work to be done to close the racial homeownership gap, according to new data from the National Association of Realtors.
The 2024 Snapshot of Race and Home Buying in America report found that the U.S. homeownership rate increased to 65.2% in 2022 compared to 63.9% a decade ago. Homeownership rates for Asian and Hispanic Americans also notched all-time highs of 63.3% and 51.1%, respectively.
Despite the gains over the last decade, the report showed the racial homeownership gap between Black and white homeowners widened from 27% in 2012 to 28% in 2022.
Significant differences in homeownership rates across the U.S.
While more people have become homeowners over the past 10 years, ownership rates lag far behind in some states. The national homeownership rate for white Americans was 72.3% in 2022, and in only two states — Hawaii and D.C. — was the rate below 60%.
For Black Americans, on the other hand, the picture looked very different. The Black homeownership rate was 44.1% overall, and less than 60% in every state. Mississippi had the highest percentage of Black homeowners at 57%, but in 10 states, the rate was less than 30%, and in North Dakota and Wyoming, only 19% of Black households owned their homes.
Minority households hit harder by housing market challenges
Elevated mortgage rates, high rents and low housing supply are squeezing many homebuyers out of the market. But these issues are more pronounced for households of color because they often face additional barriers and disparities in wealth and income, said NAR Deputy Chief Economist Jessica Lautz.
"The impacts of housing affordability and limited inventory are more extreme for minority buyers, because more than half are first-time buyers who must rely on down payment sources beyond gained housing equity," Lautz said.
The federal government has tried to address the racial homeownership gap in recent years through first-time homebuyer subsidies and greater enforcement of the Fair Housing Act.
Even so, people of color often face additional hurdles in their homebuying journey compared to their white counterparts, Lautz noted. For example, 26% of Black homebuyers were denied mortgages in 2022 versus 16% of white applicants and 15% of Asians, NAR data showed.
Black homebuyers who were able to secure a loan also received less favorable terms and higher interest rates than white and Asian borrowers, according to NAR. For instance, a disproportionately high share of Black households with mortgages — 20% — had an interest rate above 6% despite making up less than 10% of overall homebuyers, data from the Home Mortgage Disclosure Act showed.
Affordability, down payment bigger hurdles for Blacks and Hispanics
The housing affordability gap for people of color has also widened. A report released last summer by Harvard's Joint Center for Housing Studies found that affordability declined for all groups between 2022 and 2023, but minorities fared the worse. The number of white renter households that could afford mortgage payments fell by 30% during that time, while it dropped by 39% for Black renter households and 37% for Hispanics.
Saving for a down payment is another challenge for people of color because they often pay more of their monthly income toward rent, Lautz added. In Colorado, for example, 41% of Black renters pay more than the recommended 30% of their income on rent and utilities, compared to 24% of white renters, NAR data showed.
The ability to save is also greatly influenced by income, and the income gap between Black and white Americans has increased since 2012. The report noted that the median income of white earners in 2020 was $75,700 — nearly $28,000 more than the median income of Black earners. In 2012, the gap was $21,540.
One bright spot: Hispanic Americans have been closing the income gap. As of 2022, they earned about $13,000 less than white Americans, and the Hispanic homeownership rate has been climbing steadily for nearly a decade, according to NAHREP.