U.S. Homeownership Rate Rises to Post-Recession High

By many metrics, 2021 was the best year on record for the housing market, millions flocked to the market snapping up anything they could afford due to rising prices and rock-bottom interest rates. But one metric in particular, the U.S. homeownership rate, saw its biggest rise in history—1.3% to 65.5%—the highest increase on record and is also the highest the homeownership rate has been since the height of the housing bubble in 2006. 

But just because the homeownership rate has risen, does not mean that Americans across the board are getting into houses equally: The National Association of Realtors (NAR) has found through its 2022 Snapshot of Race and Home Buying in America report that Black Americans continue to face “significant obstacles along the path to homeownership.” The current rate specifically for Black homeowners sits at 43.4% (when it sat at 44.2% in 2010), while buyers of other races see higher levels of homeownership namely White Americans (72.1%), Asian Americans (61.7%) and Hispanic Americans (51.1%). 

The new study aims to examine homeownership trends by race and location to help explain racial disparities in the housing market. Building off data collected in NAR’s 2021 Profile of Home Buyers and Sellers, this report specifically documented the characteristics of who buys a home, why they purchase a home, what types of homes they purchase, and the financial backgrounds of buyers based on race. 

"As the gap in homeownership rates for Black and White Americans has widened, it is important to understand the unique challenges that minority home buyers face," said Jessica Lautz, the NAR VP of Demographics and Behavioral Insights. "Housing affordability and low inventory has made it even more challenging for all buyers to enter into homeownership, but even more so for Black Americans." 

Many were pushed out of the market recently due to the combined rise of housing prices and record-low inventory supply. Since the COVID-19 pandemic hit, housing prices have surged about 30% or $80,000 for a typical home. The NAR said that approximately 51% of homes for sale are considered “affordable” to households with less than $100,000 of annual income. 

Income varies among racial groups as well: 51% of Asian households earn more than 100,000 annually while only 35% of White households, 25% of Hispanic households, and 20% of Black households met the same income milestone. 

Looking at renters, half of Black households spend more than 30% of their income on rent. 38% of Black households are considered “severely cost-burdened" along with 20% of White renters which means households are spending more than 50% of their monthly income on rent. 

"Black households not only spend a bigger portion of their income on rent, but they are also more likely to hold student debt and have higher balances," Lautz added. "This makes it difficult for Black households to save for a down payment and as a result, they often use their 401(k) or retirement savings to enter homeownership." 

Student loan debt is also something people of color have to disproportionally handle as well. More Black households (41%) were saddled with some sort of student loan debt, compared to 26% of Hispanic households, 22% of White households, and 18% of Asian Households. The median student loan debt for Black households ($45,000) exceeded that of Hispanic ($35,500), White ($30,000) and Asian ($24,400) households. 

The study also asked buyers if they witnessed or experienced racial discrimination throughout the buying process. 32% of Black households claimed they faced stricter requirements because of their race, compared to 19% of White respondents, 16% of Hispanic respondents, and 4% of Asian respondents. 

While the NAR is instituting a number of programs and initiatives to fight the racial gap, the Department of Housing and Urban Development (HUD) has instituted its own changes. 

“Today, homeownership is the principal source of wealth creation for most American households. Unfortunately, NAR’s report confirms that Black Americans are being locked out of homeownership opportunities at an even higher rate than a decade ago,” said Marcia L. Fudge, Secretary of Housing and Urban Development “It is critical that we bridge the racial homeownership gap with intentional solutions that recognize both the persistent history of discrimination and inequity, and the current crisis of housing affordability. We must recognize that Black Americans are more likely to carry student loan debt and have higher balances. Black Americans are also more likely to experience discrimination in the housing market.” 

“At HUD, we are meeting this challenge in a number of ways including taking steps to make homeownership more accessible to those with student loan debt; tackling bias in the homebuying process; and making it clear that certain Special Purpose Credit Programs are lawful and are an important tool to help expand access to credit and homeownership for those who have experienced systemic and generational exclusion,” Fudge continued. “The Biden-Harris Administration and HUD will continue to prioritize opening the door to homeownership for families—especially those who have been systemically kept out over generations.” 

Under Secretary Fudge, HUD has taken a number of proactive steps to redress the impact of past discriminatory practices and implement new policies to help more families—particularly African Americans—realize the dream of homeownership: 

• Removed Barriers to Homeownership for Those with Student Loan Debt. The Federal Housing Administration (FHA) updated its policy on student loan monthly payment calculations to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has disproportionate impact on communities of color. The updates removed the previous requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing. The new policy bases the monthly payment on the actual student loan payment, more closely aligning FHA policies with industry standards. 
• Advanced Fair Housing. More than 50 years since the Fair Housing Act’s passage, access to wealth through homeownership remains persistently unequal. In his first week in office, President Biden issued a memorandum directing HUD to address discrimination in the housing market. Secretary Fudge is taking critical steps towards realizing the President’s directive. HUD has published both its proposed rule on countering housing practices with discriminatory effects and its interim final rule on the legal duty to Affirmatively Further Fair Housing in the Federal Register. These rules will align federal enforcement practice with the Fair Housing Act’s broad remedial purpose to end discrimination in housing. Together, they will provide the legal framework for HUD to require private and public entities alike to rethink established practices that contribute to or perpetuate systemic inequality in housing and recognize and address longstanding fair housing issues in our communities. 
• Improved Homebuyer Assistance Programs. The President’s FY2022 HUD budget proposal makes clear that housing is foundational to building a strong, more secure America. The FY2022 HUD budget includes a $100 million set-aside for Secretary Fudge’s new initiative, the FirstHOME Homebuyer Assistance initiative, which provides funding to States and insular areas – unincorporated territories of the United States – to support sustainable homeownership. 
• Took Action to Address Racial Bias in the Housing Market. On June 1st, 2021 in Tulsa, President Biden announced that Secretary Fudge would lead a first-of-its-kind interagency initiative to address inequity in home appraisals. Along with Domestic Policy Advisor Ambassador Susan Rice, Secretary Fudge launched the first interagency task force on Property Appraisal and Valuation Equity (PAVE). The effort is utilizing, quickly, the many levers at the federal government’s disposal to root out discrimination in the appraisal and homebuying process. A 2018 Brookings study found that homes in majority-Black neighborhoods are often valued at tens of thousands of dollars less than comparable homes in similar-but majority-White-communities. And the crisis is worsening: a recent study found that the gap between the appraised value of homes in predominantly White neighborhoods compared to comparable homes in predominantly Black and Latino neighborhoods nearly doubled between 1980 and 2015. 
• Called for Tools to Expand Access to Credit and Homeownership. As Congress recognized in specifically authorizing Special Purpose Credit Programs (SPCPs) in an amendment to the Equal Credit Opportunity Act (ECOA) in 1976, SPCPs can be an important tool to help expand access to credit and homeownership for those who have experienced systemic and generational exclusion. Despite SPCPs’ being specifically authorized under ECOA, for too long banks have expressed reticence to establish these programs, some citing concerns that the Fair Housing Act somehow bars what ECOA explicitly permits. HUD issued a legal opinion making it clear that certain SPCPs that are lawful under ECOA generally are not barred by the Fair Housing Act. Secretary Fudge has also convened partner agencies to discuss the furtherance of homeownership and credit availability for communities who have long been denied such opportunities.  
• Awarded Grants to Support Free and Low-Cost Housing Counseling. In January, HUD awarded $51.4 million in housing counseling grants to 177 HUD-approved housing counseling agencies and intermediary organizations. This included funding to HUD-approved housing counseling agencies that are partnering with Historically Black College and Universities (HBCUs), Hispanic Serving Institutions (HSIs), or other Minority Serving Institutions (MSIs). The funding will support housing counseling agencies in their work to help families make more informed housing choices. The awards also include funding to further training and education to attract and retain more diverse housing counseling professionals. 
• Awarded Grants to Support Asset Building Among HUD-Assisted Families. Recently, HUD awarded $101 million to 677 public housing authorities (PHAs) to support efforts to help residents living in public housing and those participating in the Department’s Housing Choice Voucher Program to meet their financial goals through HUD's Family Self-Sufficiency (FSS) Program. Participants in the program have an interest-bearing escrow account established for them. Upon successful graduation, the household receives the escrow funds to advance their personal financial goals, including improving their credit score or making a down payment on a home. 

Click here to see the NAR’s 40-page report in its entirety.