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This report looks at homeownership trends, the mortgage market and affordability by race, and home buyer demographics from the 2024 Profile of Home Buyers and Sellers, home buyers and fair housing.
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Snapshot of Race and Home Buying in America
Homeownership Trends Over the Past Decade
Despite ongoing affordability challenges, homeownership among Americans has continued to be higher compared to a decade ago. As of 2023, there are approximately 11.8 million more homeowners than in 2013. Specifically, the homeownership rate in 2023 reached 65.2%, up from 63.5% in 2013. More importantly, the previously negative year-over-year homeownership rate trend of 2022 shifted to positive gains in 2023, even as mortgage rates remained elevated and housing markets were at the lowest point of the last almost 30 years. Strong demographic shifts and wage growth contributed to sustained demand and increased homeownership.
Nevertheless, the overall homeownership rate does not tell the full story.
While homeownership rates have improved across all racial and ethnic groups over the past decade, some groups continue to lag behind. In fact, despite recording the largest year-over-year gains in 2023, Black homeownership remains substantially lower than that of other groups. Data reveals that the gap between Black and White homeownership rates has widened over the past decade, increasing from 27% in 2013 to 28% in 2023.
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Homeownership Trends by Race in the Last Decade
Over the past decade, homeownership rates have increased across all racial and ethnic groups, reflecting broader economic shifts, demographic trends, and evolving housing market dynamics. The data from 2013 and 2023 reveals steady gains in homeownership, with some groups seeing faster growth than others.
The growth in minority homeownership rates has enabled progress in reducing the homeownership gap between various racial groups and White households. Nevertheless, it's worth noting that even though the gap in homeownership rates between Black and White households showed a decrease in 2023, it still remains higher than it was a decade ago.
Meanwhile, these racial variations in homeownership can vary significantly by geography. Different regions and areas within a country may have distinct demographic compositions, economic conditions, historical contexts, and policies that impact on homeownership, income, education, and access to resources.
How REALTORS® Can Use This
- Identify high-growth buyer demographics in your area: Hispanic and Asian homeownership is increasing rapidly, while Black home buyers need more support.
- Develop tailored marketing and outreach strategies: Understanding where demand is growing helps real estate professionals connect with the right buyers.
- Focus of first-time buyer programs: Many Black home buyers are first-time buyers who benefit from FHA, VA, and down payment assistance programs.
Factors Affecting Homeownership Rate Among Racial and Ethnic Groups
A complex interplay of economic and social factors shapes homeownership rates within a society. The decision to purchase a home is closely linked to personal financial circumstances, local housing market conditions, and broader economic trends. As a result, homeownership rates vary based on a variety of factors, which can differ across time, geographic areas, and demographic groups. Several key elements contribute to these variations, affecting who can buy a home. Some of the primary factors impacting homeownership rates include
Demographic Trends
Age distribution plays a crucial role in shaping homeownership trends within different racial and ethnic groups. A younger, growing population can drive future homeownership gains, while an aging population with high homeownership rates can stabilize or sustain homeownership levels.
Considering the nuanced implications of demographic shifts, it is apparent that the impact on homeownership will differ markedly across states. In response to this complexity, the National Association of REALTORS® has conducted a comprehensive analysis, providing state-specific estimates of demographic trends that may affect future homeownership patterns.
How REALTORS® Can Use This
- Educate younger buyers with financial planning tools.
- Develop home buyer education programs tailored to first-time buyers, emphasizing credit-building strategies, saving for down payments, and mortgage options.
- Develop partnerships with lenders who specialize in serving diverse clients and buyers.
- Use social media, webinars, and community events to connect with younger buyers and build long-term relationships.
- Engage with families transferring homeownership by assisting with the sale of the property, gifting strategies, and wealth transition planning.
- Partner with attorneys and financial advisors to position yourself as an expert for families navigating wealth transfer transactions.
Affordability
Affordability – the ability to purchase a home without experiencing excessive financial strain – remains one of the most significant challenges in the housing market, particularly for first-time buyers. However, its impact is not evenly distributed across racial and ethnic groups. Variations in income levels, wealth accumulation, and debt burdens shape each group’s ability to navigate rising housing costs, creating both opportunities and obstacles. While some communities have been able to overcome affordability challenges, others continue to face barriers that keep many households out of the market. For instance, on average, racial and ethnic minorities often face lower incomes compared to White households. Lower income levels not only can make it more challenging for these groups to afford homes and save for down payments but also limit mortgage approval chances and result in higher borrowing costs.
Renters in the United States face significant challenges when it comes to transitioning from renting to homeownership. As rental costs rise, they reduce disposable incomes for renters, leaving less room for financial flexibility. Nearly half of all renters need to spend more than 30% of their income on rent. For many, this limits their ability to accumulate savings, qualify for a mortgage, and transition to homeownership in a competitive market. Given these constraints, understanding local demographic affordability trends is very important for real estate professionals looking to support first-time buyers.
How REALTORS® Can Use This
- Leverage local affordability trends to guide first-time buyers toward emerging homeownership opportunities.
- Identify high-potential markets where affordability trends favor diverse home buyers, providing them with targeted housing options.
- Develop partnerships with homebuilders, local governments, and housing nonprofits in markets with strong renter-to-home buyer potential.
- Partner with lenders specializing in FHA, VA, and first-time buyer programs to offer solutions tailored to their affordability needs.
Access to Credit
Buying a home is one of the largest financial transactions an individual will make in their lifetime. Since most people don't have the savings to buy a home outright, they rely on mortgage financing to achieve homeownership. However, access to credit is not equal across racial and ethnic groups. The ability to secure a mortgage with favorable terms depends on several factors, including credit scores, debt-income ratios, and financial history – all of which can vary by race.
According to Home Mortgage Disclosure Act (HMDA) data, mortgage applications for a home purchase were denied at a rate of 21% for Black applicants and 17% for Hispanic applicants, compared to 11% for White and 9% for Asian applicants. Higher debt-to-income ratio and credit history are the primary reasons their applications were denied.
How REALTORS® Can Use This
- Educate buyers about credit-building strategies and debt-to-income ratio improvement to increase mortgage approval chances.
- Work with lenders offering pre-qualification assessments to help buyers understand their financing options before they begin their home search.
- If a buyer is flexible on location, recommend areas with lower mortgage denial rates to improve their chances of securing financing.
- In states like Alaska, North Dakota, and Nebraska, where denial rates are lower, focus marketing efforts on first-time buyers who may be unaware of their financing eligibility.
- REALTORS® who understand state-specific lending conditions can offer more informed guidance about home affordability and financing options.
- Connect with local lenders and mortgage brokers to stay updated about changes in lending policies that may impact mortgage approval, helping REALTORS® to be trusted advisors in the home buying process.
Homeowners’ Insurance Cost
In today’s housing market, homeowners' insurance is becoming an increasingly important factor in the cost of owning a home. While insurance has always been a necessary part of homeownership, there is now a growing concern about its impact on affordability.
Many homeowners report insurance availability and pricing changes across various areas, particularly in states prone to natural disasters such as hurricanes, flooding, and wildfires. According to the American Community Survey, data show that insurance costs have increased significantly across the country. A decade ago, homeowners were paying a median of $860 per year for homeowners’ insurance. Fast forward to 2023, and that number has increased to $1,310 – a 53% increase. However, homeowners' insurance costs cannot stay the same – they rise over time, just like most goods and services affected by inflation.
How does this increase compare with the rise of inflation in the last decade? In fact, homeowners' insurance costs have been increasing at a much faster rate than general consumer prices. Over the past decade, while consumer prices have risen by approximately 30%, homeowners’ insurance costs have surged by more than 50%.
State-by-state
As of 2023, homeowners in Florida, Louisiana, Oklahoma, Colorado and Texas face some of the highest median homeowners’ insurance costs in the country, with annual premiums exceeding $2,000 per year. On the other end of the spectrum, West Virginia, Nevada, and Utah have some of the lowest homeowner's insurance premiums in the country.
Race-by-race
While all homeowners are feeling the effects of rising premiums, Black homeowners are particularly impacted due to their geographic concentration in states where homeowners' insurance costs are among the highest in the country. As a result, rising insurance expenses may present additional financial challenges for Black homeowners, and this group is the most cost-burdened among any other group.
At the national level, Black homeowners pay more for homeowners' insurance than any other group. In 2023, the median homeowners’ insurance cost was $1,360 for Black homeowners, $1,310 for White homeowners, $1,330 for Asian homeowners and $1,300 for Hispanic homeowners.
How REALTORS® Can Use This
- Ensure buyers understand how insurance costs factor into their total monthly housing expenses.
- Encourage buyers to obtain insurance quotes before finalizing a home purchase to avoid surprises.
- Guide homeowners regarding strategies to lower premiums, such as installing storm-resistant features or bundling insurance policies.
- Stay informed about state-backed insurance programs or subsidies that could help buyers in high-cost states.
