Homeownership Rate Up, But Black Americans Have Not Kept Pace

Washington, DC, March 2, 2023-While the U.S. homeownership rate has continually increased during the last decade-to 65.5% in 2021 (from 64.7% in 2011)-the Black homeownership rate has not kept pace with increases of other racial groups. Also, people of color endure significant buying challenges throughout and even after their home purchase, according to a report released today by the National Association of Realtors.

The 2023 Snapshot of Race and Home Buying in America examines homeownership trends and challenges by race and location to explain the current racial disparities in the housing market. 

The report found there were about 9.2 million more homeowners in 2021 than a decade prior, but homeownership rates varied significantly by race. The Black American homeownership rate-44%--increased less than half of one percentage point (43.6% in 2011) and continues to lag well behind Hispanic Americans (50.6%), Asian Americans (62.8%) and White Americans (72.7%). Consequently, the homeownership gap between Black Americans and any other racial group has grown, especially when compared to White households (29%), representing the largest homeownership gap in ten years (26% in 2011).

Conversely, Asian Americans (five percentage points) and Hispanic Americans (four percentage points) experienced the biggest homeownership rate gains over the last decade. The Asian American homeownership rate of 62.8% is an all-time high. White American homeownership grew by nearly three percentage points and has been consistently around 70% since 2017.

Black homeowners spend more of their income to own their homes than all racial groups, with 30% being cost-burdened-defined as spending more than 30% of their income on housing. That’s followed by Hispanic Americans (28%), Asian Americans (26%) and White Americans (21%).

More than half of Black renter households (54%) spend more than 30% of their income on rent, the most of any racial group. About 30% of Black renters are severely cost-burdened-defined as spending more than 50% of their income on rent-representing nearly 2.5 million households. By contrast, 22% of White renters are severely cost-burdened, representing 5.1 million households.

After comparing the qualifying income to purchase the typical home with the median income of renter households, NAR estimates that while 17% of White renters can afford to buy the median-priced home, only 9% of Black renters can nationwide.

Beyond affordability, Black and Hispanic home buyers also face extra challenges in getting a mortgage. Black Americans have the highest denial rates for purchase and refinance loans. According to Home Mortgage Disclosure Act data, 20% of Black and 15% of Hispanic loan applicants were denied mortgages, compared with about 11% of White and 10% of Asian applicants. Further, denial rates for Black Americans are even higher for home improvement loans. Black Americans were denied applications for nearly 17% of loans for a home purchase, 17% of loans for refinancing and 51% of loans for home improvement.

Using data from its latest Profile of Home Buyers and Sellers report, NAR analyzed the characteristics of recent home buyers, their reasons for purchasing, the steps they took in the homebuying process, and the ways buyers financed their home purchase based on race. Among all home buyers, White Americans made up the largest share (88%), followed by Hispanic Americans (8%), Black Americans (3%), Asian Americans (2%) and other (3%).

For down payments, Black Americans drew down 401(k)/pension funds more than any other group (16%), which increased two percentage points from last year (14%). Asian Americans received gifts (22%) and loans (7%) from a relative or friend more than all other racial groups.

Hispanic Americans had the largest share of student loan debt (46%), followed by Black Americans (33%), White Americans (17%) and Asian Americans (13%).

In addition to being asked about their recent homebuying experience, home buyers were asked if they had experienced or witnessed discrimination during their real estate transaction. Half of Hispanic American home buyers said they experienced steering toward or away from specific neighborhoods, followed by 29% of White, 12% of Black and less than 1% of Asian American home buyers. Forty-six percent of Hispanic American home buyers experienced discrimination by the refusal of a homeowner or agent to show property, followed by 24% of Black, 15% of White and less than 1% of Asian Americans. Thirty-nine percent of Black American home buyers reported discrimination through home appraisal, followed by 17% of Asian, 9% of White and less than 1% of Hispanic Americans.